How I Make Money In Stocks
Using IBD & MarketSmith
Mike Jaffe
mjaffe48@gmail.com
505-358-8798
Books I’ve Read / Techniques I Use
• William J. O’Neill Books
– I’ve read each many times - brought up printed charts for the same
period to see how they looked on my computer
– Suggest reading them in this order:
Amazon price: $55.00
Appearance In book
First 109 pages are
annotated stock
charts
Appearance on my computer
Slide 2
Tools I Used
• Investors.com + eIBD (electronic version of IBD paper): time
intensive
• IBD/eTables: (Don’t use - time intensive )
• IBD/Leaderboard (Don’t use - stock list too narrow)
• IBD’s MarketSmith software
– Saves time via:
•
•
•
•
Screening
Charting
Pattern recognition
Many proprietary screens that focus on most important factors
Slide 3
Methods I Use
1. William J. O’Neill in IBD
– Analyze stock fundamentals: Choose stocks with strongest fundamentals:
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EPS % change current quarter ≥ 20%
Sales % change current quarter ≥ 20%
EPS % change up during last 3 years
Current price ≥ $10
Return on equity (ROE) ≥ 17%
Profit margin ≥ 17%
JAZZ ranked #1 in Medical group ranked #2
– Proprietary ratings (higher the better):
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•
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Composite ≥ 85
Earnings Per Share (EPS) ≥ 85
Relative Strength ≥ 85
SMR ≥ 85
Accumulation/Distribution A, B, C
Leading Industry Groups 1-50
– Learn to Read charts: Choose stocks with a) best fundamentals, b)
breaking out of strongest bases with c) lowest base count on d) highest
volume
Slide 4
Find Stocks From: IBD Articles & Tables
• Start by choosing stocks from eIBD
UA up 60% in 8 months
Section A:
QIWI up 240% in 7 months
EDU up 90% in 8 months
Section B:
Small weekly charts
of IBD 50 & Market
Leaders with buy
prices (pivot point)
Section B:
Slide 5
Find Stocks From: Investors.com Screens
• View Market Pulse daily
• Compare stocks by downloading & sorting
in Excel: very time intensive
Slide 6
Quick Review IBD Bases: (http://education.investors.com/)
1.
Cup w/handle:
4.
Flat Base:
2.
Double Bottom:
5.
Ascending Base:
3.
3-weeks Tight:
6.
Saucer Base:
Occurs when, over 3 weeks, a
stock’s weekly closing price is
within 1% of its closing price
during the preceding week
Weekly
Daily
Slide 7
Find Stocks From: MarketSmith (IBD)
• Screener and chart program in one: great time saver
1. Create and save custom
screens from 135 technicals
& fundamentals
2. Choose from 64
prebuilt screens
3. Screen Results List includes base count & % to pivot
4. Click on stock to bring up chart
Slide 8
Find Stocks From: IBD MarketSmith
Create alerts
Do back testing
Intraday, daily,
weekly, monthly
charts
Can mark-up
chart manually
& save symbol
to a custom list
Shows base
pattern & base
count via pattern
recognition
Do stats pass
IBD parameters?
All fundamentals
in other
one box
Compare
top(7stocks in
qtrs.): EPS % chng,
same group
Sales % chng, etc.
Slide 9
When To Buy: IBD MarketSmith
• Daily chart: Buy 10-cents above highest point from 6 primary bases
• Daily, weekly chart: Sell using numerous sell rules
Shows:
• Pivot point (dotted line)
• RS rating & slope of RS line
• Blue band = + 5% above pivot
• Stage count
• Red band = - 8% from pivot
• % to pivot or below pivot
• Green band = + 20% apprec.
(not shown)
Slide 10
Find Stocks From: IBD MarketSmith
Access proprietary lists
Slide 11
Find Stocks From: IBD MarketSmith
Open 2nd window
Shows daily view while original window is
in weekly view to show all info at once
Slide 12
Find Stocks From: IBD MarketSmith
Show percent gain of
stock or group of stocks
for any present or past
date range
Slide 13
Find Stocks From: IBD MarketSmith
Slide 14
Find Stocks From: IBD MarketSmith
Slide 15
Costs Compared: eIBD
• eIBD:
Year
$189 ($16/mo )
Month
$240/yr ($20/mo )
Yearly savings = 21%
What you get:
• Investors.com articles and tables
• eIBD electronic paper
• eTables:
Year
$139 ($16/mo )
Month
$168/yr ($14/mo )
Yearly savings = 17%
What you get (each to view/sort & all to download to Excel):
• IBD 50 stock list
• IBD 85-85 stock list
• Big Cap 20 stock list
Total yearly cost: $328
• New America stock List
Slide 16
Costs Compared: IBD MarketSmith
• MarketSmith:
Year
$999 ($73/mo )
Month
$1347/yr ($112/mo )
Yearly savings = 35% + 45 days free
Options:
• MarketSmith software available on iPhone = Free
• Pattern Recognition = $139
• ‘Growth 250’ list with 30 proprietary screens = $349
What you get:
• Screening
• Charting
• Pattern recognition
• Many proprietary screens that focus on most important factors
Total yearly cost: $1487
Slide 17
Summary: How I Make Money In
Stocks Using IBD & MarketSmith
Find stocks with:
1.
Strongest fundamentals
2.
Breaking out of solid, clear bases
3.
MarketSmith saves me more time and ability to find more breakout
stocks worth much more than $1,487 cost (I made more than this in
my first week using MarketSmith)
Slide 18
Summary: How I Make Money In
Stocks Using IBD & MarketSmith
Questions?
Slide 19