Page 1050 - How to Make Money in Stocks Trilogy

Buying Checklist 37

As we saw earlier, the general market is always in 1 of 3 stages: “Confirmed
uptrend,” “Uptrend under pressure,” or “Market in correction.”
You can see which stage we’re currently in just by checking the Market
Pulse inside The Big Picture column found in IBD every day. (In Chapter 5,
“Selling Checklist,” we’ll cover what to do when the market stage is
“Uptrend under pressure” or “Market in correction.”)

• THE 3 MARKET STAGES •

The best time to buy stocks Proceed with caution Avoid making new buys
Be ready to take defensive Lock in gains and cut short
action any losses
© 2013 Investor’s Business Daily, Inc.
Can You Really Time the Market?

Conventional wisdom says no. Actual market history says yes.
The Current Outlook in the Market Pulse changes based on certain sig-
nals that appear every time a major shift in trend occurs.
Now keep in mind: Saying you can time the market does not mean you’ll
sell at the very top and buy at the very bottom. And it does not mean you can
predict where the market will be six months from now.
But it does mean you can spot when a potential new uptrend has begun.
And you can see when the market is starting to weaken and roll over into a
downtrend.
This isn’t about predicting the future. It’s simply about understanding
what is going on in the major indexes right now: Are institutional investors
pushing the indexes higher by continuing to buy, or are they driving the
market down by selling more aggressively?
No crystal ball required here: Simply understanding the current direction
is enough to build yourself a financially secure future. As you can see in the
next two figures, following the 3 stages in the Market Pulse will help you
make money when the market is up—and protect those profits when selling
pressure mounts and a downtrend begins. (Also go back and look at the two
examples we covered in Chapter 1, “Start Here.”)