It is a very common question I hear from my readers and also my clients. “What stocks to invest in today’s market?” or “What is a good stock to invest in?”
The answer is that there are several best stocks to invest in our current state of economy every single day. You can find these stocks if you are looking for short-term picks or if you are looking for mid-term position trade pick. And buy-and-hold investors could find their picks too.
Short term stock picks
When I look for short-term picks to trade in my portfolio I use several tools of technical analysis.
First I must decide what universe of stocks I will check for a possible trade setup. It is not really possible to scan several thousands technical charts every day. It is much better to have already a preselected list of stocks based on some technical parameters.
When I look for the best pick for short-term trade I use some good market screener or my ETF list to get an idea of what sector is presenting the best relative strength or relative weakness. Then I scan stocks in that specific sector to find the most interesting charts where I can find the best trade setup.
Here is an example. If I find that one of the most interesting sectors is Software then I go through charts of software stocks. I can check charts of all software stocks or use some filter to have automatically preselected stocks for review. Like – stocks with a price above $12 USD, with very good liquidity – average trading volume is above 500000 shares per day.
A good market screener can help to automate this process. You can use a screener built into good analysis software like Amibroker or use some free screener available on the Internet. FinViz is the best these days and I recommend it.
Mid term stock picks for position trades
I like to be in the trade for more than a few days. I like when a trade lasts several weeks and maybe months. Why ? Such a trade can make huge profit as it means that these shares are in a strong trend up or down and I can ride this trend.
Basic selection of areas to look for answer to question “What stocks to invest in?” can be found using global macro fundamental analysis, like I do. I personally prepare my own Global macro research notesfor my needs. I use them in my position trades in my portfolio of stocks and ETFs. These picks are often the best stocks to invest in. And then I use the basics of my chart analysis combined with breakout and pullback technical strategy to define my trading setup. When the trigger price is approached I open my position trade in my portfolio.