In 1994, I started using the CAN SLIM method of trading stocks. This method was developed by William J. O’Neil, the founder of Investors Business Daily. O’Neil used the best performing stocks in history, as a blueprint for the system. The strategy involves implementation of both technical and fundamental analysis.
The goal is to find leading stocks of young, innovative companies, before they make major price advances. This is achieved by only buying the very best stocks at the right time. The method also implements solid money management. No system can have stock market success in the long run, without keeping losses small.
In 1997, I was watching a young, innovative company called Yahoo, symbol YHOO. It went public in 1996, and was a leader in the new internet group of stocks. The fundamentals such as earnings per share and sales were excellent. I knew I was watching a potential big winner, and my odds of stock market success were quite substantial.
At this time, the general was in a confirmed uptrend, and Yahoo showed good technical action. The stock found support at its 50-day moving average a number of times. Then, in July, 1997, Yahoo broke through a key resistance area on very heavy volume. This is when I bought Yahoo at $ 27.00 per share.
The stock continued to show excellent technical action, as it moved up in price. Whenever there was a downward price reaction, it was in low volume. This price and volume action told me the big institutions, such as mutual funds, pension funds and bank funds, were not getting out of the stock. This is very bullish, since big institutions represent about 75% of all trading activity in the stock market.
In late October, 1997, Yahoo did break through its 50-day moving average in heavy volume. This was my signal to get out of the stock. The big institutions were starting to sell. This major clue told me a big price decline was most likely in the making. I sold all my shares, and made nearly 100% profit in about 3 months. I followed historically proven, buying and selling rules. This is how to achieve stock market success.
Hi, I’m Gary E Kerkow, founder of Tradingmarkets4u.com. This site provides information to help traders and investors become successful. I have over 20 years of trading experience including stocks, futures and options. I implement the strategies, methods, and psychology of the world’s best traders and investors. This includes Jesse Livermore, William J O’Neil and others. Visit my website at http://www.tradingmarkets4u.com
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