Study note by Bill O neil

key pt

c--current earning at least 20% growth

use at least 20 to 25%earning growth. Compare the last 2 quarters with a yr ago
be careful share dulition because EPS is the key, not total net income
look for aftercare earning like from 15% growth to 40%
the stock usually runs up hard 1 to 4 wks b4 the earning
if there is another stock showing growth in the industries, it is a confirmation
should always compare with the quarter (dec11 vs Dec 10)

a--annual earning (up last 5 yrs)


summary: concentrate on stock that has 5 yrs if proven record. Focus on strong current quarter plus a consistent 5 yrs
compare the last 5 yrs
look for annual earning growth (25% to 50%, compounding)
in a bull MIT, usually growth goes first, then heavy and like steel, chemical, machine
keep in mind the stability if annual earning growth
lol, he does not care much bat p/e. Most leaders are 20p/e and they usually expand to 45
high p/e = bull MIT. Don't buy a stock because of cheap p/e. Cheap stock for a reason
common mistake is to buy a low p/e in the ind. It usually means the company sucks, not cheap value
its easy in correctly spot a high growth than correctly value what is expensive,val don't short base on high p/e!!

n--new products, new management, new high

new product eg: iPad, MacDonald in 196x, new oil field, new concept/ method
if the stock consolidation (usually 7 wi to 15 mo), it is right to buy but avoid buying if it goes above 5 to 10% of the base high to avoid chasing
buy when the high looks high to others and sell when it looks attractive to others (guess he means breakout)

s--supple and demand

smaller float stock up faster
large cap sometimes not big mover as they too big
smaller cap buy back can be even more explosive as there is less shares to shares the big grow( I question this, why don't they use the $ to grow
want low debt to equips ratio. Safer

l--leader vs larger

buy the best 2 to 3 in a strong group
avoid sympathy stock. Eg, like tablet. Buy aapl for iPad instead of rim playbook because it is cheaper and not ran as much
if market not acting well, sell the worst acting first because the best holding stock will usually recover more on recover
buy strong stock in a weak market

i--instituiton

you need a few of this including pension, mural fund
overblown by institution can be danger eg xerox in 1983 as eg

m--market direction

know the trend of the overall market
learn the market everyday because it can change anyway
Market top can be spot by this: increased vol without upside followed by increased vol downside day
market top usually is 8 to 12% decline. In other words, increase vol in a uptrend but no movement
most top reversal occur on a rally that makes new high on 3 to 9th days and with little base
the first top reversal sometimes can happen in a decreasing vol. Don't be filed by it as it makes sense (because no one believe)
bottom can be found if we undercut the support low on a mildly increase vol..then followed by a few days of increased vol that doesn't make any progress
most bear market has 3 legs down followed by a failed rally
usually a bear market starts when the fed increased rate 3 times in a row and usually mean end of bear market when rate started to get decreased. However, this should not be the primary indicator

bull market usually start the date weak then rally while bear vice versa
in a top, there are very few leader stocks, junk stock usually rallied hard and dominate the up list while leader lag
be careful a bear market where you find a leader stock that holds the line. It is a false sign of strength, when they burn, they usually burn everything.
market bottom: forget the first 2 day rally. Focus on the 3 to 10 th day rally and see if the column increased. The follow thru day better be at least 1% in index and more column then the 1st upday. Sometime it will pull back, but it almost always go back up if there is a follow thru day

bear market usually last 9 month assuming without big problem
he seldom pays attention to oversold/overbought indicator

From another book written by Oneil

Other key pt:

• * he found that 3 out of 4 best stocks are company that has 30% growth of earning
• * Eoe should at least be 17%
• * buy at the end of cup and handle when it breaks out 1/8 of the peak and make new high. He said better not buy at the bottom becuase the probably of it turns around is only soso. Buying at the peak and thru resistance actually is low risk. (PS: better wait for the 1/8 above peak first, and Volumn is key)
• * double bottom formation. It is important the volumn dry up when the stock hit the second bottom (PS: key is the second bottom volumn--lighter)
• * most stock leader go up 20% or more in eight week or less after breaking out
• * when us is in real shit, mkt usually down 30 to 50%. If us not too bad, mkt usually down 17 to 27%. Strangly, most of these ends in fourth quarter
• * 8% loss rule
• * Signal for big correction after 4 to 5 days of distribution day within 2 to 3 weeks, see picture

• * on fifth days of distribution day stop all buying or even cut loss. The rally after that day usually is false rally and is really risky. (Distribution day is day that is down with higher volumn). This process can take one two month