Two useful steps how to find stock market picksHow to use technical analysis of stock market practicallyOne recommended and best way to invest money is to find stock market picks which are showing relative strength. Why ? Stock with relative strength is showing signs of strong accumulation by institutional investors. These investors need to place huge amount of money so their buying can move stock price. My stock trading strategies are also based on this principle. These stocks are ideal candidates for swing trading stock pick. But investors can use them also as investment stock pick. First step is to identify which part of market is stronger. I divide US stock markets into two categories.
During this first step we must evaluate which part of market is stronger then other. This can be done simply by comparing charts of these main stock market indexes. Best way is to have both charts on screen together. And compare them visually. Here is example how can be these charts compared.
As you can see in October Nasdaq stock market was able to move much higher after slighter pullback. S&P500 was much weaker and its pullback was much deeper. So conclusion is that it was better to look for stock market picks for long trade in technology related stocks. Second step is needed to find strong sector in specified part of the market There is necessary to look onto charts of sectors . It is possible to do it via ETF stocks like I do. And here is example of comparing of two sectors in technology area.
In middle of August 2008 there was easy to spot that Biotechnology sector (represented by ETF with symbol IBB) is strongest sector from Nasdaq related stocks. And that Internet sector is very weak. Logical conclusion is that good stock market picks for long trade in that time were in Biotechnology stocks. Return from stock market picks to stock chart analysis
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