Every day, I learn something new about the markets…
And today, I want to share five things that I’ve figured out about what makes for better stocks before I tell you about them inside Traders Daily Direction.
Of course, the foundation of what makes for a winning stock is that it first clears the vetting of my Stock Surge Indicator (SSI) system.
For those of you that have recently joined us, I strongly recommend making sure that you are up to speed on my SSI system.
You don’t need to know the math or to do the calculations – but you do need to understand how it works and why.
This will empower you to be able to buy into the surge stocks with more confidence.
To get up to speed on my SSI – please download for free and read my special report: The Magic of the Stock Surge Indicator.
And for the full rundown on all of this week’s stocks, check out the Watchlist right here.
But now, let me share five things that make for strong, winning stocks…
Five Characteristics of Winning Stocks
The easiest trades to manage are the ones that work immediately.
If your position is always in the green, there’s no panic.
You’re not stressed. And your account balance is growing.
But how do you know when to sell?
Or when to hold on to what could be a big winner?
Nothing is foolproof. But there are signs that a stock has more room to run.
Below are the characteristics of big winning stocks…
Follow-through after a breakout
A strong breakout day is good.
But if the price keeps climbing for several days, that is an ever better sign.
More up days than down days
This one is simple…
Count the number of days the stock is up versus the number of days when the stock is down.
If swing trading, count up weeks versus down weeks.
More volume on up days than down days
Watch the volume too.
You want to see high volume on up days showing big participation on the buy side and lower volume on the down days.
Again, if you are swing trading, compare volume on up versus down weeks.
Tennis ball action
Any time a stock pulls back (which is natural, by the way), I watch the stock’s reaction.
Is it acting like a tennis ball or an egg?
Tennis ball action will result in a quick bounce back to new highs.
An egg, on the other hand, will “splat” and fail to rebound.
I give a lot more weight to where a stock closes the day than where it opens.
You want to see the stock closing the day or week in the upper half of the candle – a signal that bulls are winning the battle.
These five metrics should help you determine whether or not you are holding a winning stock.
If you are not seeing most of these metrics, you may want to consider taking profits early.