Monster Stocks
Monster Stocks

Monster Stocks

Most of the best monster stocks are true growth stocks that trade on the Nasdaq exchange, are newer companies that are introducing new services and products to our economic landscape toenhance many lives, and then catch the attention of big money investors. (LocationĀ 67)

Why should we look at the last 10 years? Because history has proven that repeatable patterns have occurred many times in the stock market. (LocationĀ 70)

For monster stocks to flourish, there need to be major market uptrend opportunities. Table 1-1 shows the power of the market over the last 115 years and the number of those uptrend opportunities over every 10-year time period. For purposes of this book, I define a major market uptrend as a period of time of three months or greater where the market gains at least 40ā€¦ (LocationĀ 76)

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As Jim Roppel, a private money manager and was featured in my second book How Legendary Traders Made Millions, stated, "It only takes a few monster stocks, if you handle themā€¦ (LocationĀ 89)

William J. O'Neil has changed his life more than a few times during his careerā€¦ (LocationĀ 92)

It's recognizing the next monster stock at the right time and then sitting with it for the right amount of time and then selling it correctly that madeā€¦ (LocationĀ 96)

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Even more challenging is how to handle them when youā€¦ (LocationĀ 107)

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And because monster stocks are rare, clue to thefact that the elite are always rare in any endeavor in life, this bookā€¦ (LocationĀ 110)

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As O'Neil also stated: "Only one or two of every ten stocks you buy properly has theā€¦ (LocationĀ 112)

I'll also show you how markets topped and when they traded in choppyā€¦ (LocationĀ 115)

But whereas How Legendary Traders Made Millions examined how a few of the best traders made their buy-and-sell decisions regarding particular monster stocks, in Monster Stocks we'll look at the critical details of the stock actions to show you how the pros identifiedā€¦ (LocationĀ 129)

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Staggering amounts of money have been lost over the course of history trying toā€¦ (LocationĀ 132)

The treasure comes in the form of you being able to own the best-performing, and highest in demand, companies thatā€¦ (LocationĀ 137)

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But you need to stay totally objective and master yourself with the required discipline. That way you can improve on your odds of being the owner of some of those great performing companiesā€¦ (LocationĀ 139)

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They show the tracks and the footprints of what smart professional investors haveā€¦ (LocationĀ 146)

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Think of yourself as a kind of hunter: a hunter, when hunting in an uncertain environment, looks for tracks to getā€¦ (LocationĀ 149)

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Setups, as you'll see, are almost always similar. O'Neil has proven that fact over decades. He's a master monster stock hunter who knows exactly what lie's looking forā€¦ (LocationĀ 152)

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There's a reason for this. Most newer and dynamic companies list and trade on the Nasdaq. O'Neil has also proven that the really big monster stocks usually had come public within theā€¦ (LocationĀ 155)

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It's the big money institutions that drive stock prices higher. Many of those institutions shun cheap stocks, and especially penny stocks, clue to their illiquid status and clue to the fact that they are in the junk pileā€¦ (LocationĀ 157)

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In fact, O'Neil has proven that the best monster stocks over history broke out when their averageā€¦ (LocationĀ 162)

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In fact, many professionals use the gain of a big monster stock, in relation to how far above the 200-clay line it has risen, to determine when to finally sell and take their profits. (LocationĀ 183)

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As the line trends up, especially in the base, that is a signal of a strong stock, as it means it is outperforming most other stocks in the general market. (LocationĀ 186)

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with just a few of the best fundamental statistics (revenue growth, earnings growth, and return on equity) and you have the elements of the best monster stocks from the past. (LocationĀ 187)

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It's the acceleration of growth in revenues and earnings that really lead to the best price performances from the monster stocks (more on this to come). (LocationĀ 189)

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In fact, every stock you see in this book will be an elite leader in producing monsterfinancial performance. (LocationĀ 193)

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Most monster stocks have already experienced the beginning of superior financial performance by the time they take off on their incredible runs. (LocationĀ 195)

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That's why the key to selling a monster stock at or near the most opportune time will come strictly from its price and volume action, not its financial performance numbers at that point. (LocationĀ 201)

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All along, Enron was presenting financial performance that shined and was expected to get even better. Enron looked and acted so good that it even sidestepped the top of the Nasdaq market in March 2000. (LocationĀ 207)

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But its price and volume interplay warning signals were flashing, and they were the same as you will see when we go through the other best performers of the past decade. (LocationĀ 210)

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Then in early spring 1997, a rise in interest rates spooked the market. A healthy 15 percent correction kicked in from late January until right after April Fool's Day. (LocationĀ 245)

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This is an important point that you will notice as we look at these monster stocks to come. (LocationĀ 247)

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Those downtrends are just the times that many experienced monster stock hunters actually eagerly anticipate. Why? Because they always set the stage for the base building that eventually brings the next monster stocks to life when the market changes its trend and confirms a new rally. (LocationĀ 248)

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It's waiting for the confirmation of the rally (more detail on this to come) that reduces the odds of failure. (LocationĀ 254)

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The tools to gain consistency in an uncertain environment are attention to detail, the knowledge of how things worked in thepast, and control over yourself. (LocationĀ 264)

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First, you must start with the market, not the stock, as that will reduce your odds of failure. (LocationĀ 267)

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As more big investors come into the market after a correction or bear market has taken place, their action and conviction for higher-priced shares show up loud and clear. (LocationĀ 270)

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Also, the bigger the advances in the market within the first clays and weeks of a confirmation after a downtrend, the stronger the market (LocationĀ 275)

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uptrencl likely will be. It's your job to wait for the confirmation, not to jump in at the first inkling of an attempted rally. (LocationĀ 276)

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That base building period that I mentioned earlier is critical. It's criticalbecause the action within the base building time frame shows us how investors are reacting to a stock. (LocationĀ 280)

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These first leaders that break out of sound bases have the best odds of becoming the next monster stocks. (LocationĀ 285)

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Jabil actually held steady and increased during the latter part of thecorrection during the month of March and on big volume. (LocationĀ 292)

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Monster stocks have the best ascending RS lines. Look for RS lines that hold up well in the base. (LocationĀ 297)

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The best monster stocks have RS lines that actually lead the stock price right before the major breakout. (LocationĀ 297)

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One other key detail that happened to Jabil was that it found support at its 50-day line when the early April rally pulled back. (LocationĀ 307)

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Jabil pulled back and consolidated prior gains in tepid volume on its rise up. (I show those in the chart with angled hash marks.) (LocationĀ 310)

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On the way up the best stocks will pull back to consolidate their prior runs somewhat. (LocationĀ 311)

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It's like hunting for a certain type of game animal. If you like to hunt deer, guess what? (LocationĀ 341)

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When hunting for monster stocks you need to know what they looked like in the past and how they acted so you can find the next one because the chart patterns just reveal the psychological decisions of investors, which never change, because investors remain human from era to (LocationĀ 344)

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database with the charts so he could build the models so one could actually see all of this. (LocationĀ 346)

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As for Roppel concerning Jabil, he just held his initial position for the ride up and then ended up selling out near $59 as the stock broke hard to end its run. Therefore, he held this winner for the best part of its move-a five-month gain of 136 percent. (LocationĀ 354)

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And as is the case normally for monster stocks, Jabil corrected much harder than the major index after its peak. (LocationĀ 359)

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During its base it found support at its 200-clay moving average line, which is a common trait among potential monster stocks during their base building stage. (LocationĀ 368)

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But it's almost as if the 200-day line in the base is what provides the critical support. (LocationĀ 370)

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If you look at the charts of both Jabil and Compaq you should see some very striking similarities. They both looked the same. And it wasn't just the two stocks of Jabil and Compaq that did this during the major uptrencl in 1997. (LocationĀ 375)

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The Dow Jones Industrial Average began its own uptrend in tandem with the Nasdaq, which happens most times. (LocationĀ 382)

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Both earnings and sales growth were already in double-digit percentage terns for many quarters by early 1997, but with the quarter ending January 31, 1997, both those categories were still accelerating-a major component for a monster stock. (LocationĀ 385)

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Here was a great example of how a potential monster stock acts that rode right in sync with the market and then stepped up front to help lead it when it really took off on a major uptrend. (LocationĀ 391)

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Let the market bring the best groups to you through their leaders, instead of being biased in just a few select sectors within the market. (LocationĀ 395)

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That's because as an uptrend gains speed and becomes even stronger, two things will help it on its way up. (LocationĀ 400)

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Those leaders usually then coincide their breakouts with the market's confirmation or very near it, which is what we saw with Jabil and Compaq in the spring of (LocationĀ 402)

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1997. The other groups of stocks that will carry the market higher are the other monster stocks that will break out a bit later in the uptrencl. (Most of the best performers will break out within three months or so of the market's confirmation.) (LocationĀ 403)

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There will always be other opportunities and because no one knows how bad a correction or bear market can get, it's best to follow the flow. (LocationĀ 433)

If you go back and review the charts of Jabil Circuit and Compaq Computer and then compare them to each other and then to the Nasdaq chart of 1997 (LocationĀ 437)

you will see similar patterns in all three. Those patterns are not a coincidence; they are how monster stocks really work. (LocationĀ 438)

Most monster stocks, within a major market uptrend, will come alive during the first three months or so of the uptrend. (LocationĀ 439)

That's the other great thing about sticking to monster stock rules-the new monster stocks always will show up in new market uptrends when they begin and then sustain. (LocationĀ 490)

This means that the best of times don't come all the time-they come in spurts. One of the most frustrating aspects of being active in the market is when it stays in a sloppy, choppy back-and-forth fashion for long periods of time. (LocationĀ 493)

This is a key to discoveringfuture monster stocks-the stock market can change its trending direction at any time. (LocationĀ 500)

as usual, new leading stocks that build new sound bases as a hard bear market is ending began to shape up; they were ready to explode forward to lead another uptrending market. (LocationĀ 502)

Sticking with the most profitable and strongest fundamental leaders would have amply rewarded the best monster stock seekers. (LocationĀ 511)

That superior financial performance really gets the attention of big money investors. The other small key detail was that its RS line was actually climbing and gaining strength. (LocationĀ 524)

They know they can always reenter if a new base forms, the market is right, the fundamentals are still there, and so on. (LocationĀ 549)