Don’t Focus On Top Stocks To Buy Now
Instead, focus on the condition of the Market. Before you focus on the best stocks to buy, you should know when its the best time to buy stocks. You could buy a great stock at the wrong time and lose a tone of money. Understanding how the market operates is the key to long-term gains.
Hence timing is key, we are not talking about market timing but determining the underlying trend. It is easy to make a list titled ‘the best stocks to buy” by going to either Finviz or purchase a subscription from IBD and focus on the stocks with the highest relative strength ratings. But once again, if you buy a strong stock at the wrong time, its the same thing as buying a weak stock. Therefore, don’t focus only on the best stocks to buy, but focus on the best time to buy stocks.
Top Stocks To Buy Now: Understand this Simple Principle First
The greater the deviation; the better the buying opportunity
To illustrate this point we drew in a long-term trend line. Please note that this trend line has nothing to do with our trend indicator. The deviation factor is better seen with standard deviation bands.
There are many software programs on the market that will automatically fill in the SD bands; Ideally, the setting should be set at 3SD from the norm. When the markets touch these ranges (and the trend is up), then backing up the truck is the thing to do. When the market touches the -3SD bands and the trend is up, pull out your list of best stocks to buy and start going long.
You can use any screener out there from Finviz to Yahoo stock screener to find a list of great stocks to buy. Focus on companies that have high relative strength and strong sales.
Big charts do not allow you to change the settings to 3SD. The settings are fixed at two standard deviations. Despite this limitation you immediately spot two great opportunities; one was in 2003 and the other took place in 2009, clearly proving that the title of this article is valid. If the trend is up; then this is almost a green light to back the truck and loading it.
The best time to buy stocks is after a Stock market crash
But how do you get out of the market the right time, First of all, forget about trying to time the exact top, instead focus on the emotion? When the crowd turns euphoric, it is time to take money off the table and tighten your stops.
This is a very mature bull market, and it continues to trend higher because the crowd is still nervous and the most individuals think this market cannot and should not trend higher; that is why it probably will continue to trend higher. For almost two years we have been stating that this bull market would trend higher than the most ardent of bull’s expectations; that appears to have come to pass.
V Readings still at dangerous levels
Once again V readings remain unchanged, something that has never occurred since this indicator came into being. For the month of June, the readings have not budged at all; perhaps this is a prelude to a well-deserved correction. However, until this index pulls back, we can expect volatility in the markets, weather and human behaviour. Thus expect the era of politics and gossip on steroids to gather even more traction.
History never changes; the markets will experience one very strong correction before this bull keels over. The problem is that the masses have been waiting for a strong correction since roughly 2013. The ironical part is that the markets will pull back strongly, but most likely they will be trading at a higher level than they were at 2013. In 2013 the Dow was trading in the 12,800-13,000 ranges.
While it is possible that the Dow could drop to this level, it is a low probability event as the masses are far from Euphoric at the moment. Most likely the Dow will shed 25%-30% from its highs. Assume the Dow trades to 22K; at the extreme end, the Dow could drop to the 15,600 ranges. Market Update June 18, 2017
Until the trend turns negative, we can only make educated guesses regarding the intensity of the next correction. If V readings are above 4200, then the markets will overshoot to the downside as they have done so far to the upside. As Fiat money rules the world, even more, money will be poured into the next created financial disaster, which will eventually push the market to new all-time highs.
Until the people reject Fiat, the Fed will continue to create boom and bust cycles purposely; that is their primary agenda. Examine the history of the Fed, and you will see that they have gone out of their way to create these cycles. As the volume of the money supply increases the intensity of these cycles will also increase.
Stock market Investment Hysteria on Display
New Thoughts Jan 2019
A lot of noise was made over the strong correction that took place in the last quarter of 2018. permabearsPermabears were proclaiming the dawn of a new era and that investors should now prepare for a stock market crash. As usual, their sage advice was akin to rubbish and the only thing that crashed was their already bruised egos.
Months and years from now, we guaranty that everyone will look back with frustration and despair as to why they fled for the hills instead of embracing the pullback; these sorrowful please are always the same and sound something like this:
“We wish, we wish we bought stocks when they were trading at such a discount, and we promise never to make the same mistake again if given a chance.”
However, alas the power of the herd mentality is too much for the masses to resist; give in they will, and do the very thing they promised never to repeat again and hence begins the cycle of destruction and creation.
The only way to put an end to this cycle is to understand that fear is a state of mind, and on its best day it is a worthless emotion, but on its worst day, it is a very destructive one. Once you understand that fear is useless, your mind will start to formulate an immunisation plan. However, you have to recognise and accept that fear is a totally useless emotion.
One would have expected bullish sentiment readings to rise even further given the strong counter rally the markets experienced, but the current reading of 37 is roughly at the historical average. Neutral readings continue to trend upwards, and that is quite interesting. Whenever neutral readings are in the 48-52 ranges, the market has never failed to rally when the number of individuals in the neutral camp, traded in those ranges. It is a not a necessity as we have many other bullish developments (and we covered these over the past few updates), but if this came to pass it would reinvigorate the argument for Dow 30K. Anxiety is still running high, and when the trend is up, mass hysteria has to be viewed through a bullish lens.
Other Articles of Interest
Dow 21K Predicted In August 2016 (Sept 9)
Which stocks to buy now; follow the trend and you will spot the best stocks easily