Finding the Best Stocks to Buy for any market conditions is a critical component of profitable investing.
Think about it. If you use a clear and repeatable strategy to find your own profitable investments you can avoid just randomly picking stocks based on the opinions or hot tips of others. Once you understand how easy it is to screen for the best stocks to buy, many times you’ll have so many strong stocks on your watch list you’ll wonder where they were hiding all along!
Finding Best Stocks to Buy – The 3 Hits to get on the List Strategy
Casting about for stock recommendations from others is a confusing endeavor. Just go online to a financial site. You’ll find so much conflicting advice you won’t know what to do!
I developed a strategy to locate best stocks to buy that is so simple and works so well that I can now watch in amusement as the talking heads online provide sound bites that appear to be guesses at best with seemingly no consistent strategy at all. I call this strategy the “3 hits and you’re on the list” strategy.
A big key to investing profitability on a continuous basis is to find stocks that have a high potential to start a new uptrend or continue an uptrend after forming a basing pattern. Once you find these stocks you can buy them right away or add them to a watch list with an appropriately placed alert for a future action. Let’s review how you find stocks for your watch list using the 3 hits strategy.
How to Find the Best Stocks to Buy
Step One is to find stocks that are in high demand.
Best stocks to buy are in high demand
High demand means that buyers are being aggressive in buying stocks. Their buying action pushes prices higher as trading volume increases. The best stocks to buy are those being accumulated by institutions with big money to invest. These buyers are the big investors in the stock market and their buying activities show up in the OBV line.
Lets take a look at AAPL for a simple example of trading volume. As I write this article the 50 day moving average of the trading volume is greater than 260 million shares. Yes that’s 260 MILLION shares! At a current price of around $115 dollars per share that means that the dollar volume in AAPL trading each day is over $29 BILLION. That’s a lot of money changing hands each day.
When big institutions want to get into AAPL on a continuing basis you want to be buying with them. Their buying shows up on the OBV line and the OBV line is the first screen we examine to find stocks best stocks to buy.
Step Two is to verify that the stock price is in top half of the Bollinger Bands.
Find the best stocks to buy in the upper Bollinger Band
Books have been written on the construction and interpretation of the indicator known as Bollinger Bands. Indeed possibly the best book written has been authored by John Bollinger himself – Bollinger on Bollinger Bands.
However, in its simplest interpretation the price of a stock is bullish if it is above the middle of the Bollinger Band – typically the 20 period moving average, and the upper Bollinger line. This upper band defines the 20 period moving average and two standard deviations from the 20 period moving average. Prices in this area tend to be indicate a more bullish price potential.
Step Three is to verify the stock is making higher highs and higher lows
Locating best stocks to buy – stocks in an uptrend
A key to identifying stocks to buy is to find stocks in a confirmed price uptrend.
Strong stocks in an uptrend will create a series of higher highs and higher lows. These highs and lows should coincide with highs and lows of the MACD indicator.
This type of trend will typically create a price channel which will allow trend lines to be drawn along the lows and the highs.
Frequently these trend lines can be extremely predictable. Many fundamental analysts will claim they are self-fulfilling lines. In other words once a trend line can be drawn, technical analysts will claim they define buy and sell points. This boils down to a chicken vs the egg argument as to what came first. But if the focus is to find stocks to buy does it really matter as long as trends create profits?
Find Best Stocks to Buy using a 3 hits strategy.
When you can find these stocks to buy on a regular basis you will never run short of profitable investing opportunities. You can either create methods to find these stocks to buy yourself or you can view my pre-screened list with alerts already pre-set.
Review my list at this link, stocks to buy. And use the pre-set stock price alerts at the live alert link.