Eye Opener 2- Williams O' Neal

If you want to upgrade your stock selection and concentrate on the best
leaders, you could consider restricting your buys to companies showing
a relative strength rank of 80 or higher. Establish some definite discipline
and rules for yourself


buy stocks that have at least a few institutional sponsors
with better-than-average recent performance records.


The best way to determine the direction of the
market is to follow and understand every day what the general market
averages are doing.


At possible market turning points, check several averages to see if there
are significant divergences. For example, if the Dow Jones was up 10
and the S&P was up only the equivalent of two on the Dow for the day,
the S&P, being a broader index, would indicate the rally was no't as
broad and strong as it would appear on the surface




Again, the daily general market averages provide the best clues. Watch
for the first time an attempted short-term rally follows through on anywhere
from its third to tenth day of recovery. The first and second days of
an attempted improvement can't tell you if die market has really turned, so
I ignore them and concentrate on die follow-through days of the rally. The
type of action to be looked for after the first few days of revival is an
increase hi total market volume from die day before, with substantial net
price progress for die day up 1% or more on the Dow Jones or S&P Index.




At stock market lows, the individual investor is safer to wait for a second
confirmation of the turn before buying heavily. The bottom day in
the Dow Jones or the first strong day up after a major decline is usually
the first indication of a possible bottom. A good follow-through, with
the Dow Jones up 18 or 20 points or more (if the Dow is in the 1800
area) and accompanied by an increase in daily volume from the day
before, will usually be on the fourth, fifth, sixth, or seventh day of the
attempted rally. This is your second confirmation and main buy signal.
Follow-throughs after the tenth day indicate weakness.



To summarize this vitally important and rather complex subject, learn
to interpret the daily general market indexes and action of the individual
market leaders. Once you know how to do this correctly, you can
stop listening to all the uninformed, costly, personal market opinions
from amateurs and professionals alike.