This is the checklist that I go through everyday when deciding whether or not to initiate any new long positions. They are in no particular order and I only buy when all of them are checked off.
- Is the $SPXEW (The S&P500 Equal Weighted Index) above its 20DSMA? : Yes
- Is the slope of the $SPXEW ‘s 20DSMA positively sloped? : Yes 0.17%
- In my universe of stocks which is comprised of stocks that have an average daily volume of at least 100k shares, trade above $5, and have positive sales growth versus the year ago quarter, is the ratio of new 52w highs to the sum of new highs + new lows 80% or greater? : Yes 99.30%
- Of the S&P500 stocks is the ratio of new 52w highs to the sum of new highs + new lows, known as the $RHSPX, 80% or greater? : Yes 100%
- Have you read at the last 10 press releases that the company you are looking at has issued?
- Does the company you are looking at have a CQGR of 3.75% or higher in their Sales, roughly equating to a 15% or higher yearly growth rate?
- Does the company you are looking at have a CQGR of 3.75% or higher in their Earnings, roughly equating to a 15% or higher yearly growth rate? (However, I am not dogmatic on this one, as sometimes stocks with negative earnings can still rip higher on the expectations of future profits)
- Have you listened to the company’s latest earnings conference call? Do you know what was/is their guidance for the next quarter?
- Do you know when the company you are looking at will report their next quarterly earnings?
- Can you name at least one, but preferably 2, of the company’s peers? For example Nike, Under Armor, Lululemon. Do you know when your company’s peers report earnings?
- Have you checked if this company history of beating analyst’s estimates? You can check here by typing in the ticker you want.
- Do you know what the short interest is on this stock? Both the number of days to cover and the percentage of the float.
- Do you know how many analysts cover the stock? How many are a buy, sell, or hold? Are there enough negative analysts to have future upgrades serve as positive catalysts?
I don’t care what anybody says, the bottom-line is this: We are in an uptrend. Stocks are going higher. Today I bought $KKD stock at $9.70 . This stock could easily double in the next 6 months if the Coffee sectors stays in an uptrend and the broad market in general stays bullish/ sideways. I have not yet decided whether this will be a long-term hold for me, like $LULU is, I may just take the trade for a 10% profit. I will have to visit my local $KKD which is over 1 hour away from where I live and do some due diligence (eat their delicious doughnuts). If things look good from the on the ground research, I will likely make this one a long-term hold. The growth is easy to see here.