Stock traders call it the “hard right edge.” It’s the vertical line on the right side of a stock chart. It represents uncharted territory…the uncertain future…where the trader picking stocks to buy can only speculate as to their success (or failure).
Lots of investors and commentators like to look back at market history, claiming they knew this or that was about to happen. Most of those claims are bogus… made by people trying to say they knew something they didn’t.
It’s easy to say you had knowledge of something after the fact. It’s easy to play Monday morning quarterback.
But all the fantasies and after-the-fact claims of knowledge are useless when it comes to the “hard right edge” — the uncertain future that determines if your investment decisions result in profits or losses.
No one KNOWS what will happen. However, you can make an educated guess. In fact, it is essential to do so.
In the end, we all aim to have an investment strategy that gets us best positioned to achieve success after we choose stocks to buy and move beyond the hard right edge.
Below, I’ll show you one of the ultimate ways to stack the odds in your favor and succeed after crossing that hard right edge.
How to Identify Stocks to Buy for a Breakout in the Making
While we can’t see the future, we can pick up on a trend. And to determine whether a stock’s trend is likely to continue, we just need to know what’s going on beneath the surface.
Is the company posting good sales numbers? And not just in the latest quarter…but over time? Are its earnings meeting Wall Street’s expectations? Better yet, are they exceeding them?
You won’t find out by looking at a stock chart. But, in the long term, they are the kinds of factors that determine whether your investment will succeed (or fail).
All in all, I use eight of these variables in my “Quantum A” system.
When companies rate highly on the eight factors, they become stocks to buy in my system. When they don’t…they become a sell.
In 2015, I was skeptical of VMware (NYSE:VMW) for that reason — even though, at the time, everyone on Wall Street seemed to have fallen in love with it.
Normally, I do like to see the “smart money” getting in. When big, institutional money moves into a stock (or back out), that does have a large impact.
But I wasn’t seeing enough of that momentum. Plus, at the time, VMWare just didn’t measure up on my eight fundamental factors. (The trend in its earnings and its operating margins was particularly weak.)
So, I stayed away. And before long, the lackluster fundamentals translated to poor stock performance.
So what happens after all this?
If you were looking at that hard right edge, you’d see a stock just trending down.
But VMW did start looking attractive to my system in January 2017, a few months after the company began partnering with Amazon Web Services (one of its biggest competitors). Big Wall Street investors were stampeding into the stock.
And no wonder, since it started posting great numbers for earnings and operating margins, as well as cash flow, return on equity and the like.
At the end of January, VMWare finally earned my “Quantum A” buy signal.
Before long, the stock went from $87 to $150, and eventually to $200 — a powerful example of how great this system can be at picking the right stocks to buy…at the right time.