- with a K,
I have established some portfolio's based on the top 100 list in IBD. I'm looking to buy as they retest some levels of support, since the market isn't trending higher at this point.
The O'Neil system works extremely well, based on what I have read, when the market is trending. It doesn't do as well in trading ranges because profit taking can eliminate a good amount of profits for those who hold.
Since we are in a trading range currently, I expect some of these stocks will present some very good buying opportunities, especially if you see any bouncing off the 50 day moving average.
We must keep in mind that the companies on the top 100 list are the best companies in the market based on fundamentals. For those who depend on FA, they should be on these stocks like ugly on a moose. It's all a matter of timing, in my opinion.
A lot of people who claim to use FA truly don't. They look for cheap stocks period. Cheap stocks aren't necessarily fundamentally sound. How about improving fundamentals?
I say why not those who are already there?
I have had some success with low priced stocks. The success I have enjoyed has been based on TA alone. When buying cheap stocks, you have an awful lot of overhead supply and resistance to overcome. You're swimming against a very strong tide. Some of that resistance and supply needs to be taken out of the market for the low priced stocks to be successful on a risk vs reward basis.
If the economy is improving, the condition of the market will dictate that the types of companies in IBD's top 100 will be the ones to invest in. It was different when the markets were at their lows. They have trended much higher in recent months and those who had the best potential have moved forward. It's important to adjust our strategy to the condition of the market. The real cheapo's are cheap for a reason. That's why they didn't participate in the market's advance these last few months.
As long as the market continues to consolidate in this range, buying the IBD top 100 off support levels makes the most sense to me. If the market decides to break out to new highs, then buying the companies breaking out will be the way to go, I would think.
dabum |
