The CAN SLIM approach seeks companies with a proven record of quarterly and annual earnings and sales growth showing strong relative price strength and support from leading institutions. O’Neil does not mind paying rich premiums for stocks with good prospects. He feels that most strategies seeking stocks with low price-earnings are flawed because they ignore the price trend determining the price-earnings ratio, as well as the quality of the underlying earnings within the ratio. O’Neil believes that stocks generally sell for what they are worth and most stocks with low price-earnings ratios are probably priced correctly by the market. O’Neil also asserts that it is important to follow the market closely and try to lighten up your stock exposure when going into a bear market.

Markets are cyclical in nature and, to some degree, they follow the same sort of buy/sell patterns across the four business maekt cycles. Here is view of those business cycles and how the various sectors perform during those cycles. Here is a graphical view of those cycles.

Dipster refers to those traders who ride momentum. Once a short term trend develops, dipsters become incessant buyers who, on every dip in the market, load back up and put there stops under the last swing point expecting the trend to continue.

There are dipsters operating on different time frames - intraday, a few days, and a few weeks. The relative size and influence they excert on the market can be argued but their presence is not.

A qualified investor is defined as (per SEC or similar state statues) one who either has a net worth of $1,500,000 or places $750,000 dollars or more under LitKor management

Note that LitKor does not determine nor has the ability to verify whether an investor is qualified or not; the onus is upon the potential investor to state the true case. LitKor, when considering an investor as a potential client for LitKor's management services, must have the investor indicate that they are indeed a qualified investor in order for LitKor to legally manage money for them.

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Classic Definition of Trend

Every market either goes

• up (bullish
• down (bearish)
• or sideways (neither bullish nor bearish)

This up and down movement is referred to as a trend. There are three time frames that trends are apparent in (see Edwards and Magee)

• Long Term (Primary)
• Intermediate (Secondary)
• Short Term (Minor)
  

Many times, when you look at a chart on any of the timeframes you will see a high volume bar at the top of the chart. If no other bar exceeds it's high price on this timeframe, that is referred to as volume at the top. On a practical basis, volume at the top almost always gets revisited by price somewhere in the future. It becomes a magnet for price somewhere down the road.

Volume off the top is a situation where volume expands significantly as prices decline from a nominal high. It is not necessary that the high volume bar be the high price bar on the timeframe you are examining but it must be with a couple bars of the high volume bar. Volume off the top is a clear warning sign that on the timeframe you are examining, something has gone awry. It is a danger sign and usually means that you want to exit your positions or, at a minimum, become very defensive in your trading for the instrument this has happened to.

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You can find many free readers with a simple search on the Internet. Once you install a reader, click on the RSS icon on the bottom right of the Front Page and subscribe.

Technical Analysis as applied to the trading of securities, refers to the study of the market itself. It is the science of recording price action and massage that data in an attempt to predict probable future price behavior. Over the years, many technical indicators have been created for their predictive ability. The problem with technical analysis is that the body of behavior being studied is constantly changing and adapting and therefore, unlike the hard science, technical analysis is primarily composed of probabilities.

There are numerous books that have been written on this subject. The most authoritative of those writings is Technical Analysis of Stock Trends by Edwards and Magee. This comprehensive writing was first penned back in 1948 and has stood the test of time. This and other books on the subject can be found in either traditional bricks and mortar book stores or on line versions of the same.

There are online trading glossaries that contains many technical analysis terms.