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 0.07%
- 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 87.60%
- 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? (MIND) Yes
- 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? (MIND) Yes
- Do you know when the company you are looking at will report their next quarterly earnings? (MIND) Yes, Sept 5th.
- 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? (MIND) Yes, $IO reports on Aug 1st, $DWSN reports on Aug 3nd.
- Have you checked if this company history of beating analyst’s estimates? You can check here by typing in the ticker you want. (MIND) Yes
- 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?
It may not look like it or feel like it but we are in a solid uptrend. I think once we see a deal get struck in Washington on the debt ceiling issue you are going to see this market take-off like a rocket ship. You have to get long now (but always remember to use stops & protect your money) before the deal happens. I mean, even if we get some austerity, like $4 trillion in cuts over the next 10 years, it won’t matter to you as long as you own stocks that won’t be effected by those cuts.