Master the Market with Scott ONeil

11/05/2013 Members Only
Scott O'Neil, William O'Neil 41 Minutes
Keyword Tags: Investing

Due to technical difficulties during the live broadcast of this webinar, we are only able to provide a recording for the first half of the presentation. To supplement the recorded section, the following content is a summary of all the concepts discussed during the entire presentation.  

If you have any questions or comments regarding this webinar, please contact us at (800) 424-9033 or reachus@marketsmith.com.

 

Current Market

       The market is in a confirmed uptrend.

       There are three distribution days on the NASDAQ and two on the S&P 500.

       Check your charts for inching up and closing at the peak. It is a sign of institutional buying.

       The Market is up over 30% for the year, which means we are in a bull market by definition.

       Bill O’Neil is looking at this as the second year of a bull market that started after the correction in the summer of 2011, rather than the fourth year of a bull market that started after the 2009 lows.

      The fourth quarter of the year is typically the strongest quarter, while the first quarter is usually a coin flip, and the third quarter is generally tougher.

 

Holding Stocks with Conviction

Those investors that performed well in the market this year, were those that were able to hold stocks with conviction, avoid being shaken out by volatility, and hold on to leading stocks for big moves. Big money is made by concentrating on a few stocks and force feeding your best positions.

 

Planning ahead is important so you can set yourself up in a position that makes it easier to hold stocks for longer moves. This involves:

       Watch list management

       Predetermining the number of stocks to own based on your comfort zone

       Establishing proper industry group diversification

 

Starting right is crucial to holding stocks with conviction in order to secure a larger move. This involves:

       Proper identification of price consolidations on the chart. Look for volume on the breakout of a cup-with-handle. See CMG on 9/1/2010.

        Focus on the % from pivot

        Do not chase beyond pivot range

        Every first purchase must be the same amount

        Pullbacks that get logical support at a moving average

       Identify leaders to try to hold for the full move

        Key Characteristics of Big Winners:

        Big Earnings/Acceleration

        Exceptional proprietary ratings

        Precise entry/low average cost

        Truly innovative company story = Conviction

       Easier to do when consistently taking 20% gains in other positions

 

Several historical examples of “leaders” were discussed in order to highlight the characteristics of stocks that warrant holding for a larger move.

·         Franklin Resources Inc. (BEN) 1986 — Had quarterly earnings of 200%, 125%, 150%, and 120% before it started its move. It also had three tight, base-on-base consolidations that produced higher lows with each base while the market was in a correction, prior to the beginning of its move.

 

·         Reebok International Ltd. (RBOK) 1985 — Had quarterly earnings of 100%, 200%, 600%, 300%, 500%, and 600% before it started its move. It then built a textbook cup-with-handle pattern before launching into a huge move.

 

·         Apple Computers (AAPL) 2005 — Had negative earnings growth for years before it posted a quarterly increase of 300% in September of 2003. This turnaround coincided with a perfect cup-with-handle pattern that sparked its multiple year run.

 

·         Price Co. (PCLB) 1982 — Had an ROE of 55.4% prior to the beginning of its move.

 

·         B/E Aerospace (BEAV), Valeant Pharmaceuticals (VRX), and LinkedIn Corp (LNKD) were all discussed as “Leader” caliber stocks that could have been held with relative ease during the last year to capture an entire move. This requires identifying the leadership traits at the beginning of the moves, buying them right, and then having the conviction to hold them through the volatility seen throughout the year.

 

How to Handle Volatility

Portfolio Management Techniques:

       Avoid thin stocks

        Incremental adjustments to percent invested

       Diversify your portfolio industry group make-up. For example: 1/3 Energy, 1/3 Medical, 1/3 Technology

        Keep an eye on your average cost

       Position profit cushion = Staying Power

        Selling on the way up gradually builds a portfolio cushion for volatility

        Try to hold your best stocks as “Core Positions”

       Be careful about using margin. Be ready to act if you’re on margin because you can lose money twice as fast.

 

Investor Psychology:

        Don’t get carried away by day-to-day emotional swings

        Don’t get too close — focus on weekly charts

        Be aware of your trading activity — Don’t overtrade

 

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MarketSmith Speakers

W. Scott O’Neil is president of MarketSmith, Incorporated, and a portfolio manager for O’Neil Data Systems, Inc., parent company of MarketSmith. His 25 years of stock market experience include a range of leadership roles at Investor’s Business Daily, where he also served as publisher. O’Neil communicates his lifelong passion for investing at investment workshops and as a speaker at financial industry events. He is also a regular contributor to the major news media as a market commentator and writer.

Scott O'Neil
Scott O'Neil
President, MarketSmith

Our founder, William J. O'Neil, is a stock market legend. Inspired by a deep-rooted passion for the market, Bill O’Neil pioneered the use of historical precedent to analyze equities in tandem with fundamental and technical analysis. He identified seven basic factors that occurred over and over in almost all top-performing companies over decades of market cycles. Through these rigorous studies, Bill O’Neil originated a disciplined and practiced investment philosophy that has become the foundation of our product lines and is the basis for our renowned stock charts.

William O'Neil
William O'Neil
Founder, MarketSmith

Richard Marcus, product coach and national speaker with the MarketSmith education team, joined the company in 2008. In addition to teaching members how to use our research tools through one-on-one coaching, webinars, and live events, Marcus is the lead content writer for all educational materials, including the “Master the Market” webinar series with Scott O’Neil, our quarterly Stock Guide, the MarketSmith Community, and our social media sites. Marcus also contributes his expertise as a key member of our product development teams.

Richard Marcus
Richard Marcus
Product Coach, MarketSmith

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