33. How Good Is Your Broker’s Stock?
When your broker tells you about a stock that is supposed to be good, start with the chart. You will need to answer these questions:
• What is the current trend and chart pattern?
• How have people been buying and selling it (volume, momentum)?
• If it is not trending, are there any positive imbalances to watch?
• What industry is it in and how is the group doing?
• How does it compare to other stocks?
When Your Broker’s Recommendation Looks Like Nothing Special
Sometimes the fundamental news is early. If your broker presents a stock that looks mediocre on the charts, watch it for several weeks. Sometimes technical analysis will signal when the time is finally right to buy.
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