Replace the old adage “buy low, sell high”
with “buy high, sell a lot higher.”

William O’Neil

What Stocks Are Held by Top Growth Funds?

A goldmine of information can be found by looking at the stock holdings of top growth funds. This short tutorial will show you how to find this information in MarketSmith.

I’ve included a short list of several highly regarded growth funds that you can review for their holdings. I’ll also cover a few additional ways to locate fund holdings if you are not a MarketSmith subscriber.

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Look for Tightening Price Action Preceding a Breakout

The concept of tightening price action, lower highs and higher lows, along with volume declining, will often lead to a breakout that follows in the direction of the prior trend.

William Jiler in 1962 referred to this as a coil. Mark Minervini, in his book Trade Like a Stock Market Wizard, describes similar price action which he refers to as volatility contraction pattern (VCP). It is also known as a symmetrical triangle.

In this post I’ll show historical examples as well as recent breakouts and current setups. My focus here is on daily and weekly charts. With that said, take some time and look at various intraday charts, the same concepts apply.

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Percent Above or Below Moving Average and Custom Stop

The track price in MarketSmith can be used to view a stock’s price in relation to various moving averages. The downside is that the information is not displayed directly on the chart, you must right click for each symbol to view the stats.

I’ve written thinkscript that will display the distance above or below either the 21-day exponential moving average or the 10-week simple moving average. If you are viewing a daily chart you’ll see the former, when on a weekly chart, the latter.

I’ve also added information that indicates the price for a specific percentage below the moving average. The percent below can be configured using the Inputs and Options dialog in thinkorswim.

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Follow-Through Day Tutorial with Examples

When there is a market correction, it’s important to wait for a confirmation that an uptrend is underway before scaling back in. A follow-through day is the signal we are looking for.

Below is a short tutorial on how to determine when a follow-through day (FTD) has occurred. This includes the required rally days prior to an FTD as well as early signs a failure may occur. You’ll also find several annotated charts showing an index low, how to track the prerequisite rally and pinpointing where an FTD begins.

If you’d rather not get wrapped up with the specifics, you can follow me on Twitter where I’ll post as soon as we have a FTD.

Many thanks to Mike Webster for clarifications and updates.

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David Ryan on the Telltale Signs of a Correction

On a recent IBD Investing podcast, Irusha Peiris and David Ryan walked through a number of clues that may indicate we are heading into a correction. The chart of QQQ was used as many of recent leaders can be found in the Nasdaq 100.

I annotated a chart of the key points and added some additional notes as it relates to the moving averages and RS Line.

It’s important to note, these same principles apply regardless of the index, so I’d recommend keeping this information handy for future reference.

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