As demonstrated again by the strong new uptrend following last year's bear market, investors need a strategy to deal with changing market trends and volatility in growth stocks Nvidia (NVDA), Tesla (TSLA) and Google parent company alphabet (GOOGL). A key to successfully investing in stocks is making sure you have a solid — and doable — routine for investing in stocks in good times and bad.
Backed by proven buy, sell and hold rules, this three-step approach can help you navigate any market indices. Depending on the current market conditions, you will see these rules and routine applied to stocks such as NVDA, TSLA and Google stocks Amazon.com (AMZN), Microsoft (MSFT) and Apple (AAPL).
The same rules for buying and watching apply to new IPOs. So while tracking well-known names like Microsoft and Apple stocks, use the same approach to monitor IPO leaders like DoubleVerify (DV), Monday.com (MNDY) and array technologies (ARRY).
The following routine guides investors through three basic steps to help you grow and protect your money. And you'll find the screening tools and inventory lists you need to complete these steps quickly and confidently.
Investing in stocks based on sound rules and stock ratings will keep you profitable, protected and prepared in any market environment.
Three key factors for a safe and successful stock investment
Find and track the best stocks to buy and watch
This three-step process also helps you track and manage strong market uptrends, as well as bear markets, turbulent periods and periods of sector rotation. In both bullish and bearish cycles, growth stocks, technology stocks, energy stocks, retailers, industrials, and other sectors on Wall Street will be popular at times.
A key to assessing the strength or weakness of stock market indices and individual stocks is to see how they are performing around their 50-day and 10-week moving averages. Do they find support or encounter resistance?
As you review overall stock market trends, be sure to also follow individual stock chart patterns as part of this routine. This helps you identify potential buy points and buy zones for potential and current breakout stocks. Viewing such technical analysis also helps you avoid being swayed by the hype or hysteria in the headlines. This approach helps you stay grounded, keep investor psychology in check, and focus on what the market and leading growth stocks are actually doing.
Keep in mind that the stock market can change direction quickly, for better or for worse. And there will be times when certain sectors, such as growth and technology stocks, perform poorly while others show strength.
To select the best stocks to buy and watch that meet your investment criteria, use the IBD Stock Screener to browse preset lists or create your own custom screens.
Study stock charts to find top growth stocks to buy and watch
Nvidia, Microsoft, Apple, Tesla stocks and other big tech stocks, such as metaplatforms (META), Amazon, Netflix (NFLX) and Google stock. are just a few examples of stocks that have shown exceptional performance over multiple market cycles. These stocks, too, have endured turbulent periods of strong selling.
To study these winners, take a look at the daily, weekly, and monthly charts of Alphabet, Amazon, Tesla, Nvidia, Apple, and other traditional growth stocks. (If you're new to technical analysis, check out our section on reading stock charts.)
And if you're looking for the best long-term investments that have weathered multiple bouts of volatility, check out which stocks are making the IBD Long-Term Leaders list. You'll find names like Microsoft and Cadence Design Systems (CDNS).
First, check out our coverage of current stock market trends and case studies on leading growth stocks to buy and watch at Investor's Corner.
How to invest: 3-step investment routine
1. Review current market trends with the big picture and market momentum
From the Market Trend tab on Investors.com, go to: The big picture
The first step is to find out what market we are in right now. Is it time to buy stocks, or is it time to defend yourself and protect your profits?
Find out by reading the Market Pulse in The Big Picture. Here are the recommended market exposure levels to manage your risk based on the current market environment.
This five step approach to market exposure ranges from 0% to 20% in bear markets or corrections to 80% to 100% in resilient bull markets.
See also: stock market today (updated several times during each trading session)
2. Find the best stocks to buy and watch with the IBD stock lists
From the Stock Lists tab on Investors.com, go to: Stock Lists
The best-performing stocks typically share seven common traits in the early stages of their big moves.
Exclusive stock ratings and stock listings such as the IBD 50 and Sector Leaders allow you to quickly see which stocks share the most common characteristics right now. You can also use the IBD Stock Screener to find stocks that match your own custom criteria.
Which top-rated stocks are currently in or near a buy zone?
Simply scroll through the IBD screens to find highlights of the top-rated stocks at or near a potential buy range. It's a simple, effective and quick way to create your watch list.
3. Evaluate your stocks and plan your trades with Stock Checkup and IBD charts
Go to Investors.com under the Research tab: IBD Inventory Verification | IBD Charts
What is the most effective way to maximize your profit and minimize risk? Always check both the company's “fundamentals” (e.g. sales, earnings, products and industry trends) and “technical data” (e.g. price and volume development, support and resistance in the chart).
The combination gives you a huge advantage over investors who only focus on one or the other.
Is your stock successful or unsuccessful?
Stock Checkup gives you a Pass, Neutral, or Fail rating for the most important stock selection criteria. Just enter the ticker to get an instant diagnosis of your stock. (Check out how to diagnose your stocks.)
Time to Buy, Sell or Hold?
Also, before you buy a stock, use the IBD charts to make sure it's in the right buy zone. And use charts to identify the right time to take profits and reduce risk.
See also: Free Investing Lessons on Buying Stocks | When to Sell Stocks | How to read stock charts
How to Invest: Find the best stocks to buy Before they break out
IBD stock lists will help you speed up your research. You can also find alerts on stocks in or near a potential buy zone in the chart analysis for each name on IBD Sector Leaders, IBD 50, IBD Big Cap 20, IPO Leaders and Stock Spotlight.
Monitor these stock lists and indices regularly using a buy and sell checklist as part of your investing routine. Also, be sure to check out the IBD Breakout Stocks Index, which is updated weekly.
Check these screens regularly is a proven way to improve your investing results by quickly creating a high quality, actionable watch list. Using this simple 3-step routine will also help protect your profits and minimize any losses in down markets.
Follow Matthew Galgani on Twitter at @IBD_MGalgani.
Tips and tools for investing in stocks
Top funds are investing in Apple, Microsoft, and those two sectors
Find the best stocks to buy and watch with the IBD Stock Screener
See which stocks have just been added and removed from the IBD stock lists
Use checklists to improve your results: Buying Checklist | Sales checklist
View IBD stock lists and get valuations for all your stocks with IBD Digital