FAQs Frequently Asked Questions - Investor Education

Q: I see some platform providers enable organizations to apply AI prompts to their secure, proprietary knowledge database, and I can’t help but wonder if you and Gil have tested this with your own work.

Interested to know your thoughts on the Put / Call ratio on SPX

Dr. K has mentioned asset classes that can keep up with inflation. Should oil & gas be on that list or will they fall behind inflation?

Should I buy or sell stock XYZ/ETF XYZ/Crypto XYZ here? What do you think of stock/ETF XYZ? Can I call you?

What position sizing strategies do you guys use or recommend?

After reading your "Market Lab Report - QE ∞ : $6 Trillion in Spending Fuels QEndless, Bitcoin, Stocks, Bonds, Real Estate", I had this question.

Why does a specific formation wake your interest (why do you like certain formations?)

What are your thoughts to special issues (for example why does Fed Chair Powell influence something - more in detail)

You made money in a stock you discussed in the webinar. Why was this not sent out as a report?

From time to time, we get questions on making big gains, handling bubbles, and shorting. A quick refresher...

What do you think of Kelton's new book, "The Deficit Myth" regarding the US government's ability to print without consequence?

The 6/20 moving averages and MACD

Please explain quantitative easing (QE)

How to use our Focus List to optimize your stock entry and exit points.

Why didn't you put "stock XYZ" on your Focus List or in your Voodoo Report?

Please discuss your selling strategy "Seven Week Rule" which captures gains in a stock without giving back too much profit

Please elaborate on how you use the MACD

Please provide guidance on position sizing when buying individual stocks as well as on total portfolio exposure.

What is the Moving Average Undercut & Rally (MAU&R) pattern?

As a stock moves up and makes some big runs is there a certain "system" that you use to lock in profits?

Being a new subscriber and an O'Neil follower I wonder why some of your suggestions our not in the top two in their group of the 197.

Can you send the Premarket Pulse Report earlier than the market open or on the day before?

About your Focus List: How has your Focus List performed? Are you personally invested in all the names? How do you tell which stocks on the focus list are buys are not?

Do you use simple or exponential moving averages or a mixture of the two. I would just like to know what you are referring to when it comes to stop placement etc.

Do your stock picks fit my style or are they too aggressive, ie, beyond my risk tolerance threshold?

The market is too volatile so I will sign up for your service when things calm down.

So is it dangerous to buy Stock XYZ ahead of earnings? Or do you think you'll be out by then?

If you are trading using weekly charts instead of daily charts are there any alterations you make to your general investment process?

Do you ever compare past markets to current markets? For example, The Shanghai Index in 2014-15 looks very similar to the NASDAQ in 1999.

I find this highly unusual and almost unprecedented. Why is the market moving higher while the RS line of the IBD 85-85 index moving lower?

I did not sell my ETFs when the Market Direction Model switched signals.

Q: This market has made me lose my confidence. For every 2 step forwards, I make 3 or 4 back.

IBD vs VoSI on Ascending Bases and MDM

Where do you get your data for institutional sponsorship?

Q: You said that US debt was closer to $70 trillion compared to the $15 trillion figure that is out on the news. Please explain.

Q: Would it not be better if you mentioned the intention to buy stock XYZ slightly before rather than after placing said trade yourselves, even after hours?

Could you please give me an idea of how often open windows seem to occur? Do you find them on both the downside and upside?

I'm aware of people always saying that trading systems will cease to work.

Do "railroad tracks" have the same effect on a daily chart as a weekly chart?

Does the fact that Stochastics for the general market (eg. SPY and QQQQ) are approaching oversold concern you?

How do you divide the amount you use for each stock or ETF allocation and subsequently add to each of these positions? Do you have an example so as to not get too heavily weighted in one position ?

Dr K. states, initial purchase, 25% of trading account and he likes 12 - 18 positions (15-25% of account in each and adds to with 2nd/3rd/4th purchase). Can you explain in more detail these numbers.

Question on 3:1 risk/reward ratios and price targets

I am puzzled by the lagging performance in VMW, FFIV, UTHR, BIDU, NFLX and CRM while the market is up almost 200 points! Could this hint that the market is losing its upside momentum?

Have you found any evidence that stocks, which are highlighted in IBD's top 50, are targeted by algo systems that can, for example, force out many retail traders by selling a stock down 8%?

Please explain whether I should be concerned if the stock gaps down after it announces a secondary stock offering.

Please discuss wedging price/volume action.

Most of the market changes seem to happen during pre/post market trading hours. How can one protect (stop loss) during those hours? Why is there pre and post market trading anyways?

What is ERG and GPR rank?

How do you handle tricky IPOs that are leaders in their space but not forming a proper base?

2011 has been [June 21, 2011 as of this writing] the most frustrating market ever in my 10+ years of trading. When will things get easier?

Price/volume seems deceptive in 2011, and leading stocks that hold strong fundamentals often sell off hard when the major averages reverse even a couple percent.

What kind of bounce would be weak enough to short into given the choppy market action as of late? What about the fed's divide in terms of how to slow quantitative easing 2?

I am still experiencing a major problem with my trading, and it happens to be one of the cardinal sins - not letting my winners ride.

You say that I should use stop loss orders with the pocket pivots. Is this also valid for the ETFs?

Could you share some of the trading disciplines you use in managing your holdings heading into a company's earning announcement?

Could you provide some thoughts on how you would hedge against the continued downtrend of the USD$?

How do you decide to sell your positions?

If Ben Bernanke announces that QE2 is the last of the easing policies for now, will there be a negative market reaction?

Can you both address how you plan in advance how to exit your trades? What happens when money rolls out of most or all of your positions at once?

Covel's trend following traders favor mechanical black box over your overall method. Can you comment?

Since the September 2010 move I have been able to keep my drawdown to 10% or so. I have made very little progress since Dec 15 or so.

My question is regarding stock selection and stock price. Do you ever consider a stock too expensive?

From the sounds of your emails, you think there may be serious issues with the cloud computing sector based on FFIV (as of January 2011). What is the best strategy when a leading group gets his hard?

If I use options as a stock substitute, How should I calculate the 7-8% stop loss rule? A movement of 7-8% on an option usually doesn't mean much.

As a new/novice investor, I would like to better understand the basics of how QE2 works, how it affects market direction, and how it skews/affects the use of CANSLIM principles.

Do you use seasonality at all?

Even though stock 'XYZ' bounced strongly, you think it won't simply repeat the same price action of a couple of weeks ago and head lower?

What is the difference between a trailing stop and a tight stop?

What I find difficult to understand is how often you actually hold for a violation of the 50 day.

I use stop loss orders because I cannot constantly monitor my stocks' prices. How common is it for market makers to drop a stock's price in order to shake out stop-loss orders?

A question on selling

I'm a real newbie. Can you provide some constructive suggestions on trading my account?

This new stock is going to be huge. You might want to track it.

It appears to me that stock XYZ could be setting up for a 4th stage base or consolidation, am I wrong?

Can you provide some post-earnings comment on stocks XYZ, 123, both which are showing significant volume in connection with big moves, and one which you had commented on earlier.

You buy 1 unit of a stock. It doubles and then you're stopped out. Within a few days an attractive pocket pivot is flashed, do you buy 2 units back into the stock or do you reset back to one unit?

What if a stock you own gaps down?

When you say you sold a stock because it is lagging, does that mean you expect it to go up but not as quickly as others?

Do you use any indicators beyond moving averages such as volume-price indicators (OBV or Accumulation / Distribution) and any oscillators such as RSI or Stochastics?

Was the candlestick pattern on the NASDAQ on 10/15/10 a hangman? If so should we care? As you might have inferred I know just enough about candlestick charting to be dangerous!

If you have many high quality buyable stocks in a good market, which factors do you focus on most in deciding which stocks to buy? Earnings, projecting earnings, IBD ratings, group strength?

How do you determine the base count stage of a stock?

Do you factor rumors and other news into your decision making process?

I don't understand why you would look for a stock like DRYS. While it is a liquid stock, what prompted you to look in the sub $15 range especially if price reflects quality merchandise.

Why did you make a decision to short CRM today using a concentrated position, but didn't select CTXS or VMW for example.

My stock did not move higher with the strong market today. Should I sell it or be concerned?

What about using the 20-day moving average (20dma) as a selling guide?

How to Make Money in Stocks says to look for stocks with more than 30% but less than 60% institutional ownership. What are your views?

Do you hold or still hold a position in stock XYZ or ETF 123?

What are the best ways to identify the "Big Stocks" like BIDU and AAPL and the most important groups which institutions are pouring their money into such as, "Cloud Computing"?

Our general take on how to sell, in brief form.

You said, " O'Neil doesnt trade CANSLIM. CANSLIM is for retail investors." What exactly did you mean by this? Please elaborate.

What is your view on mechanical or black box trading? Is it something you are doing?

What are some things that a trader can start doing now to improve?

Stop placement

How do you identify "windows of opportunity" in the general market?

My question is in relation to the O'Neil rules of selling at 20-25% profit from a breakout buy point.

Do you think it may be time to add to stock XYZ or ETF 123?

What are your feelings of sell on Rosh Hashanah and buy on Yom Kippur? Market could pull back from here for a retest based on this. Therefore, what would you look for to turn negative short run?

I realize you wait for the fundamentals and technicals to converge to take a position, but do you ever slowly build positions in "themes" like rare earth metals or thorium?