7 signals of a rising stock price

The Seventh Sign

Let's take a look at the seven horsemen that ride along the horizon before "Anystock USA" starts to pull in profits hand over fist.

7) News and rumors: Takeovers, acquisitions, mergers, new CEO's, accounting irregularities, new product announcements, and world events are just a few situations that tend to effect the price of the underlying and one sign to look for when your fishing for winners.

6) Options: As you sift through the option chain it is fairly easy to see where the speculation lies. Ultimately, high open interest on any strike price means that someone is most probably hedging their positions but it could also be used as a clue to future events, or at least anticipated ones. The higher the open interest, the more it catches mine.

5) Analyst Upgrades: When Goldman Sachs, UBS, Lehman Brothers or any of the other top financial firms upgrade a stock or initiate coverage, there is a good chance that price movement will be on the up-and-up.

4) Stochastic: This handy formula identifies overbought and oversold points at which you should watch for price reversal. Investopedia will break down the math for all you engineers out there.

3) MAC-D: Moving Average Convergence / Divergence can be a very powerful indicator, especially when combined with Stochastics. Using one to confirm the other is a great way to super-charge your screening process. As with number 4, see the online investing encyclopedia for details on how this works.

2) Volume: Almost always precedes price. When you look at a chart of a stock that has already made a large move, usually a few days before, the volume moved slightly above average and the price did little or nothing. This is one of the more powerful clues for those who know how to read into it.

Last and perhaps the most valuable and accurate indicator of a raising stock is price movement. When you stop moving forward, you automatically move backward. If you throw an apple up in the air it will lift, lift, lift and then slow to almost a stall before it starts to drop back down. (It just happens so fast you may not be able to see the stall). Looking at charts and numbers is much easier to see when something has slowed or stalled from its current momentum.

If you wait for all 7 horsemen to appear before making an investment, you may find your time better spent watching paint dry. These are however, seven ironclad keys that you may use to boost your bottom line.