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Friday, October 24, 2014

An Overview of the CAN SLIM® Investment System

An Overview of the CAN SLIM® Investment System


Each  of the letters  represents one  of the seven characteristics of top-performing stocks:

Current  Quarterly  Earnings growtof at least 25% for the past 2 quarters. Also watcfor quarterly sales and  profit margins that are growing.

Annual Earnings growtof at least 25% for each of the past 3-5 years. Also watcfor returon equity (ROE) of at least  17%.

New Look for companies with new products, new services, new conditions in the industry, new management, or new price highs.

Supply  and  Demand Look for big volume increases on days of upside trading.

Leader or Laggard Look for the top stocks, both fundamentally and  techni- cally, in the very best performing sectors and  industry  groups.

Institutional  Sponsorship Watch what pension funds, mutual funds, banks and  other  institutions are buying.

Market Direction Three out of four stocks follow the market, therefore make sure  the market  is in a confirmed uptrend.






The CAN SLIM® Investment System Defined

= Current  Quarterly  Earnings

•   +25% or more  in recent quarters

= Annual Earnings

•   +25% or more  in each of the past  three  years

Research shows earnings growth  is the No. 1 indicator  of a stock’s potential to make  big gains. That’s why it’s important to look for stocks with strong current results, as well a history of solid earnings growth.


“There is absolutely no reason for a stock  to go anywhere if the current earnings are poor.”


-- William J. O’Neil, Chairman and  Founder of Investor’s  Business Daily


The Basics


Many people miss  out on the big winners  because they believe  they must  get in on the ground floor. They waste time and  money guessing which cheap stock  will become the next household name.


Research shows that you will have  more  success by starting  your search a floor or two higher.


Let a stock  become institutional  quality -- which means it trades $15 and  up with significant daily volume  -- and  it’s more  likely to catch the eye  of professional investors, like mutual funds  and  banks. And always  let a stock’s earnings tell you if it’s a winner.


Does  that sound like a formula for buying  too late?  It isn’t.


Yahoo’s  stock  price  surged 277% in 21 months starting  in March 2003.  During the four quar- ters  before this big move,  Yahoo offered  clues it would become a winner when  it reported quarterly earnings growth  of 100%, 200%, 400% and  167%. By that fourth quarter of triple- digit growth,  it was  as if the stock  was  flashing  “buy me” in neon.


Conventional wisdom  said  those earnings gains  were already priced  into the stock, and  it was  too late to buy. But Yahoo was  just gearing up.


And was  Yahoo unusual? Not at all.






Our studies of the greatest stock  market  winners  have  shown big gainers reported huge earnings growth  before they began their big run-ups.
Many of these stocks, however, weren’t well-known names when  they launched their runs. For example, Cognizant Technology Solutions climbed 315% in 91 weeks starting  in June
2003.  During the four quarters leading up to that big move,  it logged earnings growth  gains
of 41% to 68%. Again, it wasn’t too late to get in on a leader before that big price  move!


Yahoo and  Cognizant are not abnormal for the greatest stocks. Rather,  they are part of the pattern our research found  regardless of the time period studied.


We have  examined stocks that led the market  during  various  periods as far back  as the
1880s. And we continue to delve  into what’s currently  working in the market.


Each  study  has  consistently found  that a company’s earnings track record is one  of the strongest indicators of its potential.


Definition: Earnings & Earnings Growth


Earnings -- also  called  profit or net income -- are what a company makes after paying  all its obligations.


Earnings are reported in two ways:  a bottom-line total and  a per-share amount. The per- share figure is calculated by dividing the total earnings by the number of shares outstanding.


Earnings can  exclude one-time items  or include  special items,  such as the sale  of a plant or the settlement of a lawsuit. When comparing a company’s earnings on a year-ago basis, be aware  of anything that skews the comparison.


Quarterly  earnings refer to a company’s earnings during  a particular quarter.


Quarterly  earnings growth  is calculated by comparing a firm’s quarterly earnings to its earn- ings during  the same quarter a year  earlier.  For example, if a company earned 26 cents a share in the first quarter of 2008 and  20 cents a share in the first quarter of 2007,  it has  a
30% quarterly earnings growth  rate.


Annual earnings refer to a company’s earnings during  a particular fiscal year.


Annual earnings growth  compares a firm’s annual earnings to what it earned during  the pre- vious year.






Acceleration Helps


Winning stocks often share another trait: their earnings growth  accelerates from quarter to quarter.


For example, if a company’s earnings rise 20% in the first quarter, 25% in the second quarter and  30% in the third quarter, its earnings growth  is accelerating. That means its growing  at a faster  pace each quarter.


As earnings growth  becomes stronger each quarter, it often attracts the attention of profes- sional  investors like mutual  funds,  hedge funds,  pension funds  and  banks. They are the true movers of the stock  market  and  they have  the buying  power  to send a stock’s share price  fly- ing.


Earnings Tips


It’s also  important to look at a firm’s earnings in relation  to other  aspects of its business.


A huge increase in earnings could  be the result  of a recent merger or acquisition rather  than good old-fashioned organic growth.  A merger or acquisition is not necessarily a bad  thing
often,  it’s the catalyst for plenty  of future growth   but it helps to understand why profit is growing.  And that gives  you a better  picture  of the company’s overall health.


Take a look at the firm’s sales growth,  as well as its earnings growth.  If sales are sluggish while earnings surge ahead, that might indicate cost-cutting moves that boost earnings now, but will disappear when  the company runs  out of things  to slash.


And don’t be impressed by a company’s claim of “record  earnings.” The firm’s earnings
could  rise just 1% and  it could  still make  that claim. You want to see standout growth  in earn-
ings.  So look for quarterly and  yearly increases of at least  25% -- or higher  is even  better.


Key Points


The CAN SLIM® System: Current  & Annual Earnings


Look For:

The best earnings performance now, not just a promise of future earnings.



Quarterly earnings-per-share growth of at least 25% vs. the same quarter the year  
before.




Preferably, accelerating earnings in recent quarters.







    Annual earnings-per-share gains of at least 25% in the past three years.


•   Firms with EPS Ratings of 80 or higher.

= New


Explosive  stock  growth  doesn’t happen by accident. The biggest stock  winners  had  new products, new management or new conditions in an industry  that propelled the company to astounding heights.


That’s why it’s important to look for the new angle in a company. The Basics
New Products Ignite Growth


Stocks don’t double, triple or quadruple in a vacuum. There’s  usually  a breakthrough product or service that fuels their advance:


    Syntex rocketed up more than 480% in just six months in 1963, when it developed the
technology behind the birth-control pill.


    McDonald’s surged 1,100% from 1967 to 1971 as its low-cost, fast-food franchising      
business model  and  newly introduced Big Mac burgers swept the nation.


    Shares of stun gun maker Taser climbed more than 2,730% between July 2003 and     
April 2004 as police  departments around the country bought the non-lethal weapon.


For the best companies, success isn’t about luck. It also  isn’t about cutting  costs and  then waiting for “things  to turn around.” Rather,  it’s about innovation. As soon as one  new product is introduced, winning companies are working on the next upgrade or new ways  to sustain their leadership.


The right leader can  make  a big difference for a company and  its investors. On the flip side, inept management can  turn a company’s stock  into a laggard.


Sometimes the “new” factor that supercharges a stock  is a change in industry  conditions. For example, China’s  opening to a more  free economy unleashed a boom that provided a wide range of new opportunities:


    Commodities: Australian miner BHP Billiton’s sales to China boomed between 2002     
and  2005,  with China  accounting for 10% of its total sales. By 2007,  China  sales
made up 20% of the firm’s revenue. Meanwhile,  BHP Billiton’s shares soared more
than  500% between late July 2003 and  early November 2007.






    Shipping: DryShips benefitted as China’s demand for commodities drove up shipping
rates. It came public  at $18 a share in February 2005,  then  raced up as high as
$131.34  in less  than  three  years.


    Gambling: In 2004, Las Vegas Sands opened a casino in Macao, a Chinese territory.
       By 2006, Macao had passed Las Vegas as the world’s top gambling center. The stock  
made its market  debut in late 2004,  then  more  than  doubled in price  in less than
three  years.


New conditions can  generate a powerful  wave that can  lift the right stocks to new heights. Just  the same, don’t buy a stock  on that metric  alone. Insist on the strongest fundamentals across the board that includes things  like solid earnings growth,  sales growth  and  return on equity.


New Price Highs  Offer New Opportunities


Some investors pass over a great  stock  because it’s already reaching a new price  high. But that’s precisely the point where  many  of the best stocks gain  steam and  begin  their biggest price  moves!


The greatest stock  winners  of all time had  something “new” going  on. Sometimes it was  a new product that beat  the competition or a new management team  that infused  new goals and  direction into the company. And in many  cases, those new price  highs  were a sign of what was  to come.


A stock  climbing  to new heights can  look risky to some investors. On the flip side,  a stock falling to new lows may look safe.  But appearance is one  thing. Reality is another.


The best-performing stocks make  new price  highs  before they make  their major  leaps in price.  Moreover,  stocks at new highs  tend  to continue moving  higher,  while stocks making new lows tend  to continue to move  even  lower.


But don’t buy a stock  just because it’s hitting a new price  high. Make sure  it has  strong fun- damentals, is part of a strong industry  group, is riding along  with a general market  uptrend and  is breaking out of a chart  base pattern on strong volume.


The Wrong Path


How many  times  have  you heard the phrase, “buy low, sell high”?


Many investors find it very difficult to abandon that idea.  Naturally, everybody likes the idea  of getting something that seems to be low-priced and  a bargain. But many  people also  assume it’s too late to buy a stock  that’s already hit an all-time high, and  they’re more  comfortable buying  low. Yet stocks need to prove  themselves to you and  new highs  are a critical hint to the successful investor.






Think about it: If a stock  climbs  from $15 to $50, it has  to notch  new price  highs  along  the way at $16, $17, $18 and  so on. And IBD’s research has  found:  Stocks making  new highs tend  to go higher.


Stocks plunging to new depths, on the other  hand, can  hit new low after new low.


Trying to guess where  the bottom is and  buy at the lowest  possible price  can  be like trying to catch a falling knife: You might luck out and  grab  the handle, but you’re taking  a dangerous risk.


Your mantra for success means remembering:


“Stocks making  new highs  tend  to go higher   While stocks making  new lows tend  to go lower.”


For instance, some stocks may have  strong fundamentals or great  stories, yet they don’t climb because there’s  little interest from large  investors. So while you wait for a stock  to be discovered if it ever is other  stocks are moving  into the spotlight.


When a stock  is rallying to new 52-week  price  highs,  it’s a sign big institutional  investors are buying  shares. And they have  the buying  power  to propel the stock  still higher.


Often, the best is yet to come.


Would you shy away  from a stock  that more  than  doubled in the past  year  or less? Consider what happened with these stocks:


Coach had  a great  run in 2002 as its share price  rose  nearly  70%. That was  a hefty gain  and you might have  thought the stock’s best days  were behind it. But it still had  some energy left. After taking  a short  break, Coach resumed its climb in late February 2003,  then  went on to gain more  than  430% in just over four years.


After its initial public  offering in August  2005,  Baidu.com climbed almost 80% in a little more than  two years. Was it too late to buy at that point?  The China-based Internet  company was part of the IBD®  100 in the Sept. 10, 2007 issue of the paper and  its chart  was  highlighted with a heavy  black  border because the stock  was  near  a buy point.  IBD also  had  this insight:
“Near 219.35  buy point after clearing it on above average vol.”. The stock  went on to climb nearly  60%.


Key Points


The CAN SLIM® System: The “New” Factor






Look For:


    New management that can drive a stock to new heights


•   New products or services or new industry  conditions can  send stocks soaring


    Fundamentally strong stocks making new highs (as they emerge from sound chart      
bases on higher  volume)  are likely to climb further, while stocks making  new lows
often head lower. Therefore, focus  on the new price  highs  list for the best
potential opportunities.


    The great paradox of the stock market is that what seems too high and risky to most
investors is likely to continue rising. And what seems low and  cheap usually
goes lower.


Think of a stock’s price  as a measure of its quality (called  “institutional  quality”) and,  conse- quently,  its potential. Typically, stocks higher  in price  reflect higher  quality.

= Supply  and  Demand


The Basics


One  of the most  basic economic principles is the law of supply and  demand. And one  of the places its power  is most  sharply demonstrated is in the stock  market.


Remember our earlier discussion of new price  highs? The law of supply and  demand is what’s driving those new highs.


Strong demand for a limited supply of available  shares will push a stock’s price  up. On the flip side,  an oversupply of shares and  weak  demand will cause the price  to sag.


That’s why supply is the S in the CAN SLIM® System.


Daily Trading  Volume Is Key


So how do you measure supply and  demand? Start with its daily trading  volume.


When a stock’s price  climbs  sharply, you want to see its daily trading  volume  rise as well. That shows you that institutional  investors like mutual  funds  and  hedge funds  are buying  in.


If volume  is below  average, it tells you big traders aren’t behind the move  and  the stock  may not be able  to hold onto  its gains. And when  a stock’s price  drops, you want to see light vol- ume   that tells you there’s  no significant  selling  pressure.






But if a stock’s price  plunges as its volume  surges higher,  it’s a sign big investors are head- ing for the exits. And you might want to follow their lead.


This is particularly  true if a stock  tumbles below  a key moving  average line -- like the 50-day or 200-day -- on heavy  volume.  As their name implies,  moving  average lines track a stock’s average price  over a period of time.


Institutional  investors will often step in to buy shares of a stock  when  it dips  down  to one  of its key moving  average lines. That’s often to bolster an existing  position in the stock  to keep their investment from dropping lower. Their buying  power  will, in turn, propel the stock  high- er. You frequently see stocks finding this kind of support at a key moving  average.


Alternatively, if a stock  falls below  one  of its benchmark moving  average lines it’s a sign insti- tutions  are selling   rather  than  buying   shares.


Key Points


The CAN SLIM® System: Supply  & Demand


Look For:


    IBD’s stock tables, online quotes and other tools provide a quick way to assess the     
size of demand for a stock’s shares.


    Volume % Change is the percent change above or below   a stock’s average trad-  ing volume  over the last 50 trading  days. This uncovers companies not yet widely known, but that are experiencing emerging demand.


    Price increases should be accompanied by increases in volume. That shows you insti-
tutional  investors like mutual  funds  and  hedge funds  are buying  in.


    Price declines should come in lower volume, which tells you there’s no significant sell-
ing pressure.


    If a stock’s price plunges as its volume surges higher, it may be a sign big investors    
are heading for the exits.


    Institutional investors will often buy shares when a stock dips to a key moving average
line.


    The Accumulation/Distribution Rating tracks a stock’s supply and demand. Look for     
stocks with an A or B Rating.








9  






= Leader vs. Laggard


Leaders: Choosing To Win


In the world of fiction, the underdog often wins. Unfortunately, it rarely works that way in investing. Steer  clear  of stocks that are laggards. In the stock  market, that sad-looking stock at the bottom of the pack  often just falls further behind the leaders.


But when  you choose stocks that have  solid fundamental characteristics like earnings growth  and  profit margins and  are thriving in the best sectors, your prospects are better because you are selecting “institutional  quality” stocks that get noticed by the biggest traders
the institutional  investors like mutual  fund and  pension fund managers.


The Basics


In one  of our largest studies of the greatest stock  market  winners  from the early 1950s through 2000,  on average the big winners  outperformed 87% of the market  before they began their most  dramatic price  advances.


In a bull market, stocks that are doing  the best tend  to keep doing  well, while those slumping are likely to drop  further.


Turnaround candidates exist, but the odds are against them  and  it can  be tough  to pick the right one.


So a better  strategy is to stick with proven winners  -- companies with CAN SLIM® traits. Leadership Can  Pay Off
A leading company with a cutting-edge product, a much-needed service, or a company that comes from an in-demand industry  will pull to the front of the pack.


    Brought to U.S. shores by an Australian surfer in the 1970s, Ugg sheepskin boots        
were rebranded as high-end luxury footwear  by Deckers Outdoor in the mid-
1990s. Then in 2003,  Oprah  Winfrey featured the sheepskin boots on her list of
top holiday  gifts. Uggs  raked in $37 million for Deckers that year.  Was it
a one-season fad? Hardly. In fiscal 2007, Ugg boot  sales totaled $347.6  million. By late
2007,  Decker’s  shares had  climbed nearly  700% in just four years.


    Starbucks made its stock market debut June 1992. How far can a coffee-shop concept
take  you?  In its first eight years on the market, the stock  price  jumped more  than
1300%.






    Titanium Metals carved out a niche  for itself by milling more  of the pricey,  lightweight     metal  than  any other  U.S. firm. Customers like Boeing  and  Airbus use  the titanium it mills to make  more  fuel efficient jets. When the firm’s stock  surged in late January
2005,  it had  already climbed more  than  80% in the previous 12 months. Was it too late to buy in? Not at all! During the year  that followed, Titanium Metals’ stock  climbed another 460%.


Key Points


The CAN SLIM® System: Leadership


Look For:


    When choosing investment candidates, stick with the leaders. These tend to be firms
with in-demand products or services.


    Steer clear of lagging stocks. They’ll likely remain laggards.


    Dont overlook a stock simply because its shares have already logged some big gains.
Many of the largest winners  were already outperforming the market  when  they
launched their big price  moves.

= Institutional  Sponsorship


Big institutional  investors, like mutual  funds,  hedge funds,  banks and  insurance companies, are the driving force behind much  of the trading  activity in the stock  market.


And when  it comes to investing, it pays  to watch  the pros.  Because they have  millions - and often billions - of dollars  to invest,  their decision to buy or sell a stock  can  determine its fate. If they choose to buy a stock, their increased demand for its limited supply of shares can push its price  higher.  Conversely, their decision to unload their holdings can  send its price tumbling.


The term “institutional  sponsorship” refers  to the shares of stock  owned by large  institutional investors.


The Basics


Institutional  investors make  their money buying, holding  and  selling  stocks. They dig deep for information  before they invest in a company, and  once they do, they keep a close eye  on their investment. Their analysts and  researchers study  the firms they put their money into, meeting with top executives, evaluating industry  conditions and  gauging the firm’s outlook.






These pros  don’t buy a stock   also  known  as taking  a position in one  swift move.  That would push the stock’s price  up too quickly.


Instead a fund manager will buy some shares, let the price  settle  down,  and  then  buy more. An institutional  investor  may spend several weeks or even  months taking  a position in a stock.


That’s good news  for individual investors. If you can  learn  to spot  the signs that institutional investors are buying  a stock, you can  follow their lead.


Selling is a bit different. When these large  traders decide to sell a stock  in their portfolio, the process may sometimes be orderly.  But if they choose to get out quickly which in today’s fast-moving news  cycle  often happens a stampede can  result.  That’s why as an individual investor, you should sell a stock  as it is rising, rather  than  trying to pinpoint  exactly  when  it has  reached its peak. A stock  will usually  flash a series of warning  signals when  it’s nearing the end  of its price  run.


Follow the Institutional  Footprints


As we mentioned earlier,  Institutional  investors usually  look for firms with solid earnings and sales track records and  they avoid thinly traded, cheap stocks with spotty  histories. That’s because it’s tough  for a fund that’s investing  millions of dollars  to take  a position in a thinly traded, cheap stock  without sending its share price  soaring.


Instead, they tend  to buy stocks priced  at least  $15 on the Nasdaq and  at least  $20 on the NYSE. They also  opt for stocks that trade  at least  300,000  shares a day on average. You should as well.


And keep in mind: Most of the greatest winners  start  their big price  runs  when  they’re trading at $30 a share and  higher.  So don’t be afraid of those higher-priced stocks. Those are the ones the institutional  investors are putting  their money into and  that’s what makes a $30 stock  climb to $40, $50 and  more.


Key Points


The CAN SLIM® System: Institutional  Sponsorship


Look For:



higher  or send it falling.



Institutional investors tend to buy stocks priced at least $15 on the Nasdaq and at  



least  $20 on the NYSE. They also  opt for stocks that trade  at least  300,000  shares a


day on average.


    Follow the lead of big institutional investors. Their buying power can propel a stock        




    IBD’s Mutual Funds  & ETFs section regularly  profiles top-rated mutual  funds  and  talks to their mangers about which stocks they’re buying  and  selling.


The section includes tables spotlighting top-rated funds  which list the stocks that fund is holding,  buying  and  selling.


To find top-performing mutual  funds,  look at the fund’s 36-Month  Performance Rating.
It runs  from A+ to E and  appears in the top right corner of the charts in the mutual  fund sec-
tion. It also  runs  on Mondays and  Fridays  in IBD’s mutual  fund tables.

= Market Direction


Buying a stock  during  a market  downturn can  be like trying to swim against the ocean tide: You might make  some progress, but the going  will be tough, and  a big enough wave of sell- ing could  drown  you.


That’s because the majority of stocks tend  to follow the market’s general direction. They’ll rise if the market  is rallying and  they’ll fall if it’s in a downturn.


A better  strategy is to follow the market’s general flow and  make  the trend  your friend. In other  words,  buy when  the market’s in an uptrend and  sit on the sidelines when  it’s working through a correction.


This section will help  you learn  to size up the health  and  direction of the stock  market. The Basics
When folks talk about the stock  market  or the general market, they’re usually  referring  to one of the four major  stock  market  indexes. These consist of companies from a range of sectors and  industries. Some indexes are made up of smaller  stocks, others are home to bigger, more established companies. By watching the indexes, you’ll get a well-rounded perspective of the overall market:


    The Dow Jones Industrial Average made up of 30 well established companies with
large  market  capitalizations.


    S&P 500 - 500 companies with market capitalizations ranging from more than $400 bil-
lion down  to about $1 billion. It’s a broad index, representing a wide swath  of
the economy.


    Nasdaq Composite- Consists of about 3,000 companies from all sectors, but with a     
heavy  emphasis on technology firms, as well as newer  growth  stocks.






    The NYSE Composite which includes more than 2,000 stocks listed on the New York
Stock  Exchange. Companies range from smaller  caps to those worth hundreds
of billions of dollars.


It’s also  a good idea  to keep an eye  on other  indexes such as the S&P SmallCap 600 - These are 600 smaller  companies tracked within one  index.


In addition to the major  indexes, follow IBD’s proprietary indexes. These show  you the perfor- mance of top growth  stocks.


The IBD®  New  America  Index tracks  the stocks of all companies covered in The New  America section for six months. The stocks that comprise this index will change slightly each day,  as newly profiled stocks are added, and  stocks that we reported on exactly  six months ago  are removed. This index gives  you an excellent glimpse into the overall performance of entrepre- neurial  firms and  companies with products and  services that are in heavy  demand.


The IBD®  100 index tracks  the performance of stocks in the IBD 100. These are the top 100 performing companies each week,  sorted by a combination of fundamental and  technical strengths. The companies listed on the IBD 100 and  their rankings are revised after the mar- ket close every Friday. The index tracks  the performance of each stock  for the duration that it remains on the IBD 100. Once  a stock  is removed from the IBD 100, it is no longer  tracked in the index.


By following the major  indexes, as well as IBD’s own, you’ll have  a greater feel for the types of stocks the market  is favoring right now. Watching their daily price  and  volume  moves will help  you keep your finger on the market’s pulse. The indexes will flash signals when  they’re launching a new rally or when  they’re ready  to take  a break.


Interpreting the stock  market’s many  nuances is a learned skill. You can  become more  famil- iar with market  timing by watching Market Wrap Videos each day.  IBD market  experts explain the current action,  and  what you should be looking  for.


Other  sources for market  information:


    IBD’s The Big Picture column gives  you a road  map  to help  size up the stock  mar- ket’s daily action.  It also  alerts  you to market-leading stocks that are breaking
out of bases or breaking down.  The column appears daily in the newspaper’s A
section and  is available  to subscribers at Investors.com.


    The Market Pulse,  which accompanies The Big Picture column, gives  you a quick run down  of the day’s  market  action.  It also  tells you the market’s current outlook,  lists quality stocks making  big moves and  during  a rally, any distribution days  that have cropped up.






    During the trading  day,  IBD’s market  writers post  online updates at Investors.com in      the Markets Update  column. Updated multiple times  a day,  it alerts  readers to leading stocks that are heading higher  or nearing buy points. Its writers also  keep close tabs
on how the major  indexes are faring.


•   The Markets Update  column appears in the Top Stories  carousel on the homepage.
During trading  hours it also  appears in the IBD Stock Research Tool. In addition, a link
in the IBD Stock Research Tool makes it easy for subscribers to include  the column in
the My Routine  feature.


Key Points


The CAN SLIM® System: Market Direction


Look For:


    Don’t fight the market’s trend follow its lead. Buy when the market is in an uptrend
and  sit on the sidelines when  it’s working through a correction.


    The follow-through day occurs sometime after the third day of an attempted rally,         
when  one  of the four major  stock  indexes climbs  sharply one  day and  volume
rises  from the previous session.


    Not every follow-through day guarantees a rally some fail. But no new bull market
has  started without one.



A distribution day occurs when  one  of the major  stock  indexes falls more  than  0.2% in one day on higher  volume  than  the previous session. When the market  piles up four or five dis- tribution  days  in just a few weeks, and  the uptrend seems to have  stalled, chances are it’s heading into a correction.