The First Watch List

2

Frist Week January 2015

WL, Monday 1/5/2015

1. SWKS – IBD 50 #2

2. AMBA – IBD 50 #3

3. NXPI – IBD 50 #5

4. ILMN – IBD 50 #14

5. MNST – IBD 50 #18

6. CMG – Sector Leader and Leaderboard

7. SKX – Monitoring for six months after big, strong advance in 2014.

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Watch List Monday, 1/5/15

4

Sector Leader

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6

Daily 9/16/2014

Skechers

Notice it during this advance

Frequently In Stock Spotlight

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Screens Of The Day Autumn ‘14

• Estimate Beaters

• Small Cap Leader

• Accelerating Mutual Fund Ownership

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New America 9/10/2014

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Often in IBD TIMESAVER TABLE

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Skechers (SKX)

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Strong, noticeable 85%, 8-month prior advance

Good Base

High Earnings Growth

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1st Reset

2nd

3rd

Weekly 1/2/2015 Not Perfect

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5:2

SKX Weekly 1/2/2015 Good Accumulation

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Not Perfect

Guidelines for Pick Stocks – A Start• Start Picking from the IBD 50, Sector Leaders, or custom MarketSmith screen. • Annual Earnings Growth +25%, • Quarterly Earnings Growth +25%, +50% if better, +75% is better, …..• Quarterly Sales Growth +20%• Accelerating Earnings and Sales Growth ( Very Attractive)• Something NEW• Do and Grade a Stock Checkup, Pick Grade B or better• Full and Proper Base, describe the base. • A/D Rating C or Better• EPS Rating ≥ 95• RS Rating ≥ 95• RS Line headed up and making a new high. • Composite Rating ≥ 95• U/D Volume Ration ≥ 0.9• ROE ≥ 17%• PTM ≥ 18% • ROE + PTM ≥ 30%, 40% or even ≥ 50%• Read IBD articles, particularly New America. • Visit the company website• Concisely state the company business and what is “new” that is driving growth

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On Balance

SKX Goes On The Watch List

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Questions?

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WL, Monday 1/5/20151. SWKS – IBD 50 #2

2. AMBA – IBD 50 #3, Sector Leader

3. NXPI – IBD 50 #5, Stock Spotlight

4. ILMN – IBD 50 #14, Leaderboard

5. MNST – IBD 50 #18,

6. CMG – Sector Leader & Leaderboard

7. SKX – High earning growth; turnaround; we watched it soar last year; we like it.

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We have $200,000 to spend on stocks using full Margin.

Are You Ready For Margin?

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3

Buy Just Right

4

Manage a Portfolio

5

Sell Just Right

The CAN SLIM Business

2Make a Watch List

1

Study & Write Rules

Post Analysis Review

6

21

Buying Stocks Depends on What?

1. On watch list

2. Price breakout, not necessarily volume. (I want +40% or more volume but don’t wait for it.)

3. Having available buying power

4. Assess market is “bullish”

a. In confirmed uptrend

b. Uptrend under pressure

c. Correcting, but assess that it will soon be in an uptrend.

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Daily, Monday, 1/5/2015

Confirmed Up TrendUnder Pressure

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Daily, Tuesday, 1/6/2015 Correction

Time for a new rally?

What Are Leading Stocks Doing?

What Are WL Stocks Doing?

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Daily, Wed, 1/7/2015 Correction

A Rally Day

Buy Stocks When They Breakout

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Until My Portfolio Is Full

Provided The Portfolio Is Working

Are We Ready?

Once In A While – Rarely

Stuff Happens Fairly Fast

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Good Stock Move Together

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19 orders the first week. Less Than four per day

But they can cluster

How Good Is Your Trading Desk?

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How Good Is Your Trading Desk?

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Ready at the opening bellWatching Pre-market

7 minutes

3 minutes

Order Window Open

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Ready at the opening bell

Watching Pre-market

4 minutes later

3 minutes

4 minutes later

9 minutes later

12 minutes later

What does this tell us about the market?

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Daily – Friday 1/9/2015

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Daily – Friday 1/9/2015

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Daily – Friday 1/9/2015

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Weekly – Friday 1/9/2015

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Daily – Friday 1/9/2015

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Daily – Friday 1/9/2015

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Weekly – Friday 1/9/2015

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Daily – Friday 1/9/2015

Portfolio The 1st Week

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Seven Stocks

Why Seven?

Any Questions?

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Why 7 Stocks?

How Much Money For Each?

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The Example Portfolio

$100,000 In A Margin Account

Use Full Margin

$200,000 Initial Buying Power

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3

Buy Just Right

4

Manage a Portfolio

5

Sell Just Right

The CAN SLIM Business

2Make a Watch List

1

Study & Write Rules

Post Analysis Review

6

45

How Many Stocks To Own

Portfolio Size Number of Stocks to Own

< $5,000 2

$5,000 to $20,000 3

$20,000 to $200,000 4 to 5

$200,000 to $500,000 5 to 6

$500,000 to $1 million 6 to 7

Over $1 million 7 to 10Seven is Better

How to Make Money in Stocks – Chapter 12, pp 273-275

How Much Of Each To Buy

Example of $200,000 Portfolio

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Pretend to be bigger than I am.

Not starting after a correction. Less sure of leadership and the market. Diversify more.

Scaling-Into Initial Positions

1st Buy at the Pivot Point

Forms the Base and Is50% of the Initial Position

2nd Buy is 2.5% above Pivot Point

The Next 30% of the Initial Position

3rd Buy is 4.5% above Pivot Point

The Final 20%

Pyramiding

Reduces Risk

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$200,000 Buying Power

• Seven Stocks Initially

• $28,570 each initial position

• Scaling in

– B1 50% at the ideal buy point - $14,285

– B2 30% ~ 2.5% above the first buy – $8,570

– B3 20% ~ 4.5% above the first buy - $5,715

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Any Questions?

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Portfolio SnapshotAt End Of 1st Week

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Portfolio End of 1st Week

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You’ll Have The Excel Workbook

7 Stocks1. ILMN2. MNST3. SWKS4. AMBA5. SKX6. CMG7. NXPI

Going To End Of Second WeekFriday, 1/16/2015

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Portfolio

End of 1st Week

1. ILMN – B1 & B2

2. MNST – Full IP

3. SWKS – B1 & B2

4. AMBA – Full IP

5. SKX – Full IP

6. CMG – Full IP

7. NXPI – Full IP

End of 2nd Week

1. MNST – Full IP

2. SWKS – B1 & B2

3. SKX – Full IP

4. CMG – Full IP

5. NXPI – Full IP

6. UVE – B1 & B2

7. AKRX – B1

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Failed

Failed

Sell Rules

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3

Buy Just Right

4

Manage a Portfolio

5

Sell Just Right

The CAN SLIM Business

2Make a Watch List

1

Study & Write Rules

Post Analysis Review

6

56

What Is Our #1 Objective?

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Preserve Our Capital & Sanity

Exercise Portfolio Sell Rules

Sell Rules Will Be Referenced by Number When Used

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Full Sell Rules At The End

Sell Rule Summary

1. Sell -7% from buy price. (Cut Loss Sell Rule)

2. Take gains +20% to +25% above pivot point, unless within the first 8 weeks. Also See rule #14. (Profit Goal Sell Rule.)

3. When profitable 6%-11% or so use 10%-14.5% cushion. (Decline from the peak sell rule)

4. If -7% failure three times stop buying and study. (Three-Strikes Rule)

5. Sell if it plunges below the 50-day on huge volume. (Pierce 50 on huge volume.)

6. Sell if it gaps down on huge volume. (Big Gap Down on Huge Volume)

7. If market corrects you may sell lagging positions to reduce exposure. 8. If up ≥ 20% in ≤ 3 weeks hold 8 full weeks. (Certain-teed hold rule)

9. Sell only if written sell rule is triggered.10. Stocks surging up past the sell goal may be held using the 10-day line as

a selling guide. (Short tern gain extension)

11. If portfolio is down 4% for the week (no margin) to 8% (full margin), sell weak stocks to reduce exposure. Generally sell at least one full position to cut risk.

12. Probably sell if a breakout on good volume stalls and goes negative within a day or two. (Failing Breakout sell rule.)

13. Sell all or part of stock if afraid or confused.

Sell Rule Summary

14. Don’t sell for profit taking for the first 8 weeks. During this time sell only if a protective sell rule is triggered. This is like the 25% profit goal, #2. Hold until you reach 8 weeks, and +25%. In a few cases you might hold a stock for 13 weeks before concluding it is not going to perform. (Time Goal Sell Rule)

15. Keep a 3 to 1 profit to loss plan. (Profit-to-Loss Ratio Rule)

16. Assess risk and sell if needed before earnings, but hold if possible for the earnings report. (Earnings Release Hold Rule)

17. If closes a week up 60% from IP then use big cushion sell rules. (Big cushion sell rules)

18. Sell if a breakout did not happen or stalled out, but mostly don’t use this rule unless you are quite sure. (Failed Breakout Sell Rules)

19. Generally hold stocks that are going sideways for 13 weeks (one quarter) before dumping it, but the least performers may be sold to feed winners or buy new opportunities.

20. Usually sell all of a stock that has a takeover offer. 21. May sell is if a stock is persistently weak after owning it for eight week. 22. Select a few stocks to hold for longer term, larger gains. 23. Plunged significantly (4%-5%) on huge volume (+100% or more). 24. Sell all of a stock in a climax top. If in doubt you can scale-out.

Sell Rules Starter Set

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Any Questions?

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Portfolio

End of 1st Week

1. ILMN – B1 & B2

2. MNST – Full IP

3. SWKS – B1 & B2

4. AMBA – Full IP

5. SKX – Full IP

6. CMG – Full IP

7. NXPI – Full IP

End of 2nd Week

1. MNST – Full IP

2. SWKS – B1 & B2

3. SKX – Full IP

4. CMG – Full IP

5. NXPI – Full IP

6. UVE – B1 & B2

7. AKRX – B1

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Failed

Failed

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Daily – Friday 1/16/2015

IBD 1/20/2015

Monday, 1/5/2015

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FailedSell Rule #12 – Failed Breakout

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Good

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Okay

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FailedSell Rule #3 – Decline From Peak

Rule #3 Decline From Peak CushionPick Your Desired Cushion

Basically A Trailing Percentage Stop

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Use 14.5% Decline From Peak

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$100.00

-14.5%

$85.50

Sell Rule #3 Sell Point

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Questions?

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Barely Okay

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Okay

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Barely Okay

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Okay

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Good

Watch List – Monday, 1/12/2015

1. AKRX – IBD 50 #4, Stock Spotlight, 29%-29%

2. AVGO – IBD 50 #5, Stock Spotlight

3. ULTA – IBD 50 #12,

4. CELG – IBD 50 #14

5. FB – IBD 50 #27

6. GILD – IBD 50 #29

7. UVE – IBD 50 #37, 2nd stage, tight, 50-day

Might Have Bought It, It Worked

Didn’t Break Out Yet

Broke out too soon

Didn’t Break Out Yet

Didn’t Break Out Yet

Watch List Monday, 1/12/2015

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CMG – Sector Leader

Watch List – Monday, 1/12/2015

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INSIDE THE 50 Monday 1/12/2015

AKRX Also A Sector Leader

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Snapshot At End Of Second Week

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Two Positions Failed In 2nd Week

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Sell Rule #12 – Breakout FailedSell Rule #3 – Decline From The Peak (14.5%)

Losses Are Small- 3.0%- 4.3%

Realized Gains Tabulated

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End 2nd Week Accounting

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7 Stocks1. MNST2. SWKS3. SKX4. CMG5. NXPI6. UVE7. AKRX

Sold two stocks, bought two

To End of 3rd Week

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