What Makes a Stock (Bond, Commodity) Look Good?

Michael N. Kahn, CMT

If you can find at least three of the following characteristics in a stock, the chances are you will pick a winner:

• Rising price trend as more and more investors jump aboard.

• Rising volume as investors become more aggressive in their purchases.

• Strong, but not excessive, price momentum. Anything higher indicates that supply and demand are out of synch.

• Strong sector. If the sector is doing well, there is likely to be enough business for all stocks in it.

• Strong market. A rising tide raises most boats.

• Supportive environment. Low input prices, high output prices, low cost of doing business, and favorable supply and demand in the industry.

These are the basic criteria. ...