Timing Is A Key To Stock Market Success

After the 1929 crash, it took the stock market about 27 years to get back to its high of 1929. The bear market that started in early 2000 crushed the NASDAQ 100. As of this writing in late 2010, the index isn't even close to its high, achieved in early 2000. Amazingly, you are better off owning the wrong stock at the right time than the right stock at the wrong time. This is because about 75% of all stocks follow the general market direction or trend. What does this tell us? It tells us, timing is crucial to overall success. It makes a big difference when you buy and sell a stock at the right time. The very best stock market participants own the right stocks at the right time. That is how they achieve stock market success, and make fortunes.

A successful strategy is to buy the best stocks at the best time. The best time to buy stocks is when the general market is in an uptrend. Look for stronger volume as the general market moves up, and lighter volume when the market corrects. This will tell you the stock market is in a healthy uptrend. Watch out if during a 2 or 3 week period, the market has a number of down days on heavy volume. These are called distribution days, and a sign the market is ripe for a correction, or possibly the beginning of a bear market.

When the general market is in an uptrend, look for fundamentally strong stocks that are breaking out of technically sound base patterns. You want volume to be much heavier than normal, as the stock breaks through a key resistance area. Heavy volume tells you that big institutions such as mutual funds and pension funds are buying your stock. This is important, as these big buyers are the fuel that can carry a stock to very high price levels. Another important factor is to make sure your stock is a leader, in a better performing industry group. Stocks tend to move in packs or groups. This will also help your stock move up in price.

In my opinion, buy and hold is for the most part, a flawed strategy. Unless you are able to buy fundamentally strong stocks near the end of a major bear market, or at the beginning of a major bull market, it simply is not worth it to buy and hold. You are much better off buying the best stocks at the right time, and implementing solid money management. This is the key to stock market success, and the way to make a fortune.

By: Gary E Kerkow

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Hi, I'm Gary E Kerkow, founder of Tradingmarkets4u.com. This site provides information to help traders and investors become successful. I have over 20 years of trading experience including stocks, futures and options. I implement the strategies, methods, and psychology of the world's best traders and investors. This includes Jesse Livermore, William J O'Neil and others. Visit my website at www.tradingmarkets4u.com