We’ve got daily Graphs charts in our office dating all the way back to the early nineties. And we still sometimes refer back to them. Why? Because chart patterns repeat as they are reflections of human emotions; by studying chart patterns, along with fundamentals such as earnings and sales helps us build a universe of stocks that becomes our master list.
We use MarketSmith. And the reason why is it is great data. It’s great fundamental data, which you see right in here, earnings and sales. But it’s also significant technical data. As far as the chart is concerned, it’s just a good clean, and simple chart.
We love the price; we love the volume action. We love everything about it. Also, we like the fundamental data that are shown here. It shows the earnings over the course of the years. It shows the price high and low.
It tells you about the group rank and the SMR rating, which is sales, margins, and return on equity. It’s got all this clean data in it. Also, it tells you the average daily volume of the stock. But here’s really a big reason I use it, and I have to share this with you.
This is very important. Bill O’Neill talks about key stocks that have earnings and sales up 25% or higher.
Both of those constraints and that’s great. There’s nothing wrong with that. But here’s what I found. I have seen some tremendous growth stocks that have one of two variables. This is really important for you.
Last quarter’s earnings were up 40% or higher minimum. Right down here, apples are only up 18%. Last quarter’s earnings were up 40% or higher than the previous two quarters, and sales were up on average 45% or higher. So you can say, well, Pat, what’s that give you?
Here are some constraints for you. I have two screens. One is last quarter’s earnings of 40% or higher. It’s over $10 a share. Trades more than like 200,000 shares a day. It’s above the 50-day. It’s within 15% of 52-week highs.
And a couple of other constraints top 2030 groups, or all the other constraints are the same. But instead of earnings, the average sales growth for the last two quarters was 45%. I’ll show you something right here, folks.
See if this will open for us. Here they are right there. 40% earnings, top 20 groups, 45% sales, top 20 groups. Well, here’s what we’re going to do. We’re going to click on this right here. Down here, you can see it’s running.
Full Youtube Video Here: MarketSmith 40 45 Screen Construction
But the rationale here is this. It’s not touting the MarketSmith product; it’s touting the research. 40% earnings last quarter or 45% average sales the last two quarters. Leading groups, the top 20 groups.
It’s 40 stocks. I can go through those easily. I combine the two screens together; maybe it comes up with 50 stocks. That’s a great shopping list for you. I hope this helps you. And again, this is the kind of research we want to do.
I’ve been doing this since 1986. I was there for the crash of 87. That is a big reason I put together missionwinners.com. I will tell you this is to educate you. It’s to inspire you. It’s to educate you. I don’t want to just give you fish.
I want to teach you to fish. How will we do that? Very simply, I will show you charts. Give the rationale behind the screening process fundamentally and technically. Give a great chart education so that eventually you’ll be able to. My goal is to speed up your learning curve, learning curve so that you’re able to find good stocks on your own.