Page 914 - How to Make Money in Stocks Trilogy

166 HOW TO MAKE MONEY IN STOCKS SUCCESS STORIES

breakaway gap-ups early in their run. These big gap-up moves in price can
make investors nervous, but they are often characteristic of true market
leaders.

Handling Buyable Gap-Ups
Buyable gap-ups should only be entered in stocks exhibiting strong funda-
mental strength in an uptrending market. The model stock book of stocks
that IBD has researched for over 130 years has many examples of stocks
with gap-ups that went on to make big moves in the market, but these com-
panies were also leaders in their industry and had strong earnings and sales
along with other key fundamental criteria. A more successful buyable gap-
up play occurs in a market leader that has already proven itself but is rock-
eting higher due to a positive earnings report.
When large institutional money goes into a stock, it is a good indication
that they have faith in the company and its products or services and see the
likelihood of success in the future.

• KEY POINTS •

• Track stocks that break out right after a follow-through day
to determine the health of the rally and to track potential
big winners.
• Your best-performing stock should be your largest holding.

• Have a set of written rules near your computer to avoid
emotional trading.
• Gap-ups should only be entered in stocks that are exhibit-
ing strong fundamental strength in an uptrending market.
• When evaluating a company, visit a store or buy some of
their products.

David Ryan

David’s first introduction to the stock market was from his dad, who saw
investing as a way to pay for a college education. Since David was pretty
young at the time, his dad would talk about companies like Disney so David
could relate to them better. When David was 13 years old, he bought his