I attribute my modest success as a trader to preparation and building strong watch lists. Entering and exiting trades is the easy part. Most of my time and energy is focused on narrowing thousands of stocks down to a strong, manageable list of stocks that will beat the market. This focus list, depending on market conditions, consists of 80-120 stocks that I trade from.
Today is a good example of how important it is to work off of a strong list of stocks. Yesterday the S&P 500 had the best percentage gain it has had in a number of years, posting a 2.92% gain. While that’s a great gain for the average stock today, it’s not so hot when compared to my focus list; 87 of the 100 stocks on the list posted a 3% gain or higher. In fact, 47 out of 100 posted gains of 5% or more.
Trading from a list that beats the market greatly increases your odds of beating the market. That’s why I spend so much time scrutinizing my watchlists. You’ve heard me say many times that I am not a stickler for precise entries and exits. However, I am obsessive about the stocks I trade.
Here are yesterday’s top 25 performers from my focus list: