1. How I Make Money In Stocks Using IBD & MarketSmith
Mike Jaffe

2. Books I’ve Read / Techniques I Use
William J. O’Neill Books
I’ve read each many times - brought up printed charts for the same period to see how they looked on my computer
Amazon price: $55.00
First 109 pages are annotated stock charts
Suggest reading them in this order:
Appearance In book
Appearance on my computer

3. Tools I Used
Investors.com + eIBD (electronic version of IBD paper): time intensive
IBD/eTables: (Don’t use - time intensive )
IBD/Leaderboard (Don’t use - stock list too narrow)
IBD’s MarketSmith software
Saves time via:
Screening
Charting
Pattern recognition
Many proprietary screens that focus on most important factors

4. Methods I Use William J. O’Neill in IBD
Analyze stock fundamentals: Choose stocks with strongest fundamentals:
EPS % change current quarter ≥ 20%
Sales % change current quarter ≥ 20%
EPS % change up during last 3 years
Current price ≥ $10
Return on equity (ROE) ≥ 17%
Profit margin ≥ 17%
JAZZ ranked #1 in Medical group ranked #2
Proprietary ratings (higher the better):
Composite ≥ 85
Earnings Per Share (EPS) ≥ 85
Relative Strength ≥ 85
SMR ≥ 85
Accumulation/Distribution A, B, C
Leading Industry Groups 1-50
Learn to Read charts: Choose stocks with a) best fundamentals, b) breaking out of strongest bases with c) lowest base count on d) highest volume

5. Find Stocks From: IBD Articles & Tables
Start by choosing stocks from eIBD
Section A:
UA up 60% in 8 months
QIWI up 240% in 7 months
EDU up 90% in 8 months
Section B:
Small weekly charts of IBD 50 & Market Leaders with buy prices (pivot point)
Section B:

6. Find Stocks From: Investors.com Screens
View Market Pulse daily
Compare stocks by downloading & sorting in Excel: very time intensive

7. Quick Review IBD Bases: (http://education.investors.com/)
Cup w/handle:
Flat Base:
Double Bottom:
Ascending Base:
Saucer Base:
Occurs when, over 3 weeks, a stock’s weekly closing price is within 1% of its closing price during the preceding week
3-weeks Tight:
Weekly
Daily

8. Find Stocks From: MarketSmith (IBD)
Screener and chart program in one: great time saver
1. Create and save custom screens from 135 technicals & fundamentals
2. Choose from 64 prebuilt screens
3. Screen Results List includes base count & % to pivot
4. Click on stock to bring up chart

9. Find Stocks From: IBD MarketSmith
Create alerts
Intraday, daily, weekly, monthly charts
Do back testing
Can mark-up chart manually & save symbol to a custom list
Do stats pass IBD parameters?
All fundamentals in one box (7 qtrs.): EPS % chng, Sales % chng, etc.
Shows base pattern & base count via pattern recognition
Compare other top stocks in same group

10. When To Buy: IBD MarketSmith
Daily chart: Buy 10-cents above highest point from 6 primary bases
Daily, weekly chart: Sell using numerous sell rules
Shows:
Pivot point (dotted line)
RS rating & slope of RS line
Blue band = + 5% above pivot
Stage count
Red band = - 8% from pivot
% to pivot or below pivot
Green band = + 20% apprec. (not shown)

11. Find Stocks From: IBD MarketSmith
Access proprietary lists

12. Find Stocks From: IBD MarketSmith
Open 2nd window
Shows daily view while original window is in weekly view to show all info at once

13. Find Stocks From: IBD MarketSmith
Show percent gain of stock or group of stocks for any present or past
date range

14. Find Stocks From: IBD MarketSmith

15. Find Stocks From: IBD MarketSmith

16. Costs Compared: eIBD eIBD: eTables: Year Month $240/yr ($20/mo )
Yearly savings = 21%
What you get:
Investors.com articles and tables
eIBD electronic paper
Yearly savings = 17%
eTables:
Year Month
$139 ($16/mo )
$168/yr ($14/mo )
What you get (each to view/sort & all to download to Excel):
IBD 50 stock list
IBD stock list
Big Cap 20 stock list
New America stock List
Total yearly cost: $328

17. Costs Compared: IBD MarketSmith
Year Month
Yearly savings = 35% + 45 days free
$1347/yr ($112/mo )
$999 ($73/mo )
Options:
MarketSmith software available on iPhone = Free
Pattern Recognition = $139
‘Growth 250’ list with 30 proprietary screens = $349
What you get:
Screening
Charting
Pattern recognition
Many proprietary screens that focus on most important factors
Total yearly cost: $1487

18. Summary: How I Make Money In Stocks Using IBD & MarketSmith
Find stocks with:
Strongest fundamentals
Breaking out of solid, clear bases
MarketSmith saves me more time and ability to find more breakout stocks worth much more than $1,487 cost (I made more than this in my first week using MarketSmith)

19. Summary: How I Make Money In Stocks Using IBD & MarketSmith
Questions?