Top Stock Pick Strategies

Written by admin on September 17th, 2011

Many investors and traders begin with the notion that there is a formula or system that if used correctly, will produce consistent returns in the stock market. Over the years, we have learned that top stock pick strategies, almost without exception, are those that stick with the very basics. There is no system or strategy that is going to earn consistent returns in all market environments. What worked yesterday, may not work today and what works today may not work tomorrow.

Trend Direction

Investors tend to behave like a school of fish. Like fish, who swim in unison, 70 percent of a stock’s movement is determined by the overall market trend. Any trading system will fail if it produces trade signals that run contrary to the market’s trend.

First, you need to determine if you are in a bull or a bear market environment. Generally, in a bull market, dips are bought and short sales fail, whereas in a bear market, selling pressure quickly meets each price rise.

The 200-day average is one of the best measures of a bull or bear market. If it is rising, the market is likely bullish and if it is falling, the market is bearish.

Pick Leading Stocks in Leading Sectors

When you trade stocks, you are competing against other stock traders. Every dollar you earn is a dollar you take out of the pocket of another trader. Very few people will be smarter than the millions of traders they are competing with. The smartest group out there are institutional traders who work for banks and large funds as they have large research teams who are experienced and have successful track records.

So, rather than try and outsmart the market, why not just follow the smartest people in the market?

Focusing on the leading stocks in the leading sectors allows you to see where smart money is putting their money to work, putting you on the right side of the trade.

Fundamentals Matter

Traders oftentimes rely on technical analysis, reasoning that a company’s fundamentals don’t matter over the short run. We’re here to tell you that fundamentals do matter.

Take the Chinese company RINO for example, In 2010, RINO broke out to a new price high on good volume, triggering a buy signal for technical analysts. Had they paid attention to the fundamentals, however, they would have noted an accounting scandal in the industry and a massive amount of institutional short interest in the stock.

A few lucky traders may have timed RINO correctly, but they were exposed to a massive amount of risk.

In order to avoid this type of risk, before we buy we make sure the company has great earnings, cash flow, relative strength and increasing institutional ownership.

Never Buy Above a Base of Support

Finally, once you have established trend direction, ensured you are buying only leading stocks in the top performing market sectors and you have made sure to focus on companies that are most likely to succeed due to great fundamentals, it is time to find stocks that offer a good buy point.

It does you no good if a stock meets the first three stock pick criteria if it is trading so far above a base of support it is unsafe to buy.

In the example above, we looked at the fundamental factors of the stock FOSL.

Now we want to see if FOSL has a chart that is as enticing as its fundamentals.

And indeed it does. It’s showing leadership as it breaks out to new highs on volume, it’s in a nice strong uptrend, and it is currently trading at a place where downside risk can be easily managed as it is trading directly at uptrend support.


Because we first checked to see if FOSL had strong fundamentals backing up the strong price action we avoided the pitfalls that bury so many traders in losses and because we bought FOSL where we could easily manage the risk we were able to enjoy quick solid gains.

Newsletter Service

You may have noticed that with other trading stock newsletters you are provided only the name of the stock and perhaps a suggested entry price. We understand how frustrating and useless this can be so we have attempted to make this process as simple and straight forward as possible.

With each selection you are provided a chart with a clearly defined entrance price, a clearly defined profit-taking price, and a clearly defined exit price where you are to stop out if something goes wrong.

SRS Top Stock Pick Strategies Subscription Service

Daily market analysis

Stock trading recommendations

Detailed entry, target, and stop loss prices

Detailed stock trade description (technical and fundamental)

Detailed guidance for open positions


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