The good, bad and the ugly in the Magnificent Seven stocks and the stock market overall since 2022 clearly show that investors need a strategy for how to invest amid changing market trends. After a bear market in 2022, a bull market in 2023 and now tortured times in the current market, Nvidia (NVDA), Microsoft (MSFT), Tesla (TSLA), Apple (AAPL), Meta Platforms (META), Alphabet (GOOGL) and Amazon (AMZN) only emphasize that reality.
XAlbeit with new signs of pressure, the positive change in fortunes for Nvidia stock, Meta, Microsoft, Amazon, Google and others since last year paints a bullish picture. But despite what CEO Elon Musk calls the "blindingly obvious" strategy to focus on self-driving vehicles, Tesla stock continues its skid well below key moving averages.
The action in the EV maker is just one indicator of the need for investors to stay flexible and focused on risk management.
Nvidia provides an excellent example. After a dismal 2022, the AI leader made the list of the 2023 Best 100 Stocks, along with Tesla and Meta. At least four Wall Street firms put the artificial intelligence powerhouse on their buy lists for 2024. In January, Nvidia launched a breakout that sent shares soaring, powered largely by the company's lead in artificial intelligence and massive earnings growth.
Nvidia has now formed a new flat base, which could spark a new breakout — if the stock market indexes cooperate. But shares of NVDA have felt some pressure as the tech-heavy Nasdaq continues its slide below its 50-day moving average. Nvidia's base remains intact, and AI giant had managed to find support at its 50-day line.
It's a good reminder that individual stocks do not operated in a vacuum. Strength, weakness or uncertainty in the general market have a major impact on each stock, even "magnificent" ones like Nvidia, Meta, Microsoft and more.
So keep in mind rules for when to sell stocks to lock in profits as well as cut short any losses.
Remember that one key to successful stock investing is to make sure you have a sound — and doable — routine for investing in stocks in good times and bad.
Nvidia Reveals 8 'Secrets' For When To Sell Stocks. No. 2 Is Key.
How To Invest Using Time-Tested Rules
Backed by time-tested rules for when to buy, sell and hold, this three-step approach can help you navigate whatever the market indexes do. Depending on current market conditions, you'll see how these rules and this routine apply to stocks like NVDA, TSLA, META, AMZN, MSFT and GOOGL.
Also note that the same time-tested approach also provides the tools to handle tech stocks like Netflix (NFLX) and other bellwether names. Netflix stock offers its own example of resilience. The streaming pioneer gapped up on its earnings report in January, showing again how Wall Street has changed its tune on NFLX. Now Netflix faces a new test as it prepares to report again after the close.
The same guidelines outlined in this routine can teach you how to invest in IPOs to buy and watch. So while tracking household names like Microsoft stock and Apple, use this same approach to monitor IPO Leaders.
The number of stocks currently on the IPO Leaders screen stands at six, including Cava (CAVA). Like Nvidia and several others, CAVA stock has so far held support at its 50-day line.
The routine below walks investors through three basic steps to help you grow and protect your money. And you'll find the screening tools and stock lists you need to quickly and confidently follow those steps.
Investing in stocks based on sound rules and stock ratings will help you stay profitable, protected and prepared in any market environment.
Find And Track The Best Stocks To Buy And Watch
This three-step process also helps you track and handle strong market uptrends, as well as bear markets, choppy periods and times of sector rotation. This is vital in learning how to invest successfully. During bullish as well as bearish cycles, growth stocks, tech stocks, energy plays, retailers, industrials and other sectors will come in and out of favor on Wall Street.
Tesla, Google and Nvidia are just three examples of highly watched stocks that have gone through roller-coaster rides in recent years. The same certainly goes for Facebook parent Meta Platforms.
Boosted by a rebound in ad sales and the artificial intelligence boom, META stock has delivered an impressive rebound after entering a long slump in September 2021. Meta Platforms currently trades right around its all-time high. Last year, the AI wave also helped power turnarounds in MSFT, GOOGL, AMZN, TSLA and a whole slew of AI stocks.
Meta continues to show resilience, holding most of its big gains from its gap-up on earnings last quarter. The company is on tap to report earnings on April 24. The social media giant just lanched its newest AI model.
One key to gauging strength or weakness in the stock market indexes and individual stocks is to see how they behave around their 50-day and 10-week moving averages. Are they finding support or hitting resistance?
To monitor how aggressive or defensive you should currently be at any given time, be sure to monitor IBD's recommended market exposure level. As a result of recent pressure in the major indexes, the recommended market exposure level has declined to 20%-40%.
Monitor Stock Charts
Another key to stock investing is learning how to read stock charts. While checking the general stock market trends, be sure to also track chart patterns in individual stocks as part of this routine. This helps you identify buy points and buy zones for potential and recent breakout stocks.
Watching such technical analysis also helps you avoid getting swayed by any hype or hysteria in the headlines. This approach helps you stay grounded. It also helps keep your investor psychology in check, and stay focused on what the market and leading growth stocks are actually doing.
Also, keep in mind that the stock market direction can change quickly — for better or worse. And there will be times when certain sectors, such as growth and tech stocks, perform poorly while others show strength.
To zero in on the best stocks to buy and watch that fit your investing criteria, use the IBD Stock Screener to browse preset lists or build your own custom screens.
Study Stock Charts To Find Top Growth Stocks To Buy And Watch
Nvidia stock, Microsoft, Apple, Tesla and the other Magnificent Seven stocks — Meta Platforms, Amazon and Alphabet — are just a few examples of stocks that have shown exceptional performance across several market cycles. These stocks have also gone through turbulent periods of heavy selling.
To study these winners, take a look at the daily, weekly and monthly charts for these and other traditional growth stocks. (If you're new to technical analysis, see our section on how to read stock charts.)
And if you're looking for the best long-term investments that have weathered several volatile periods, see which stocks make the cut for IBD Long-Term Leaders. You'll find names like Microsoft and Cadence Design Systems (CDNS) on the list.
To get started, see our coverage of current stock market trends and case studies of leading growth stocks to buy and watch with Investor's Corner.
How To Invest: 3-Step Investing Routine
1. Check Current Market Trends With The Big Picture And Market Pulse
Under the "Market Trend" tab on Investors.com, go to: The Big Picture
The first step in how to invest successfully is to know what kind of market we're in right now. Is it time to buy stocks, or is it time to play defense and protect your profits?
Find out by checking the Market Pulse inside The Big Picture. You'll find the recommended market exposure level to help manage your risk based on the current market environment.
This five-tiered approach to market exposure ranges from 0%-20% in bear markets or corrections, all the way up to 80%-100% in robust bull markets.
Also see: Stock Market Today (updated multiple times throughout each trading session)
2. Find The Best Stocks To Buy And Watch With IBD Stock Lists
Under the 'Stock Lists' tab on Investors.com, go to: Stock Lists
The best-performing stocks typically display seven common traits in the early stages of their big moves.
Using exclusive stock ratings and stock lists like the IBD 50 and Sector Leaders, you can quickly identify which stocks are most strongly showing those same characteristics right now. You can also use IBD Stock Screener to find stocks that fit your own custom criteria.
Which Top-Rated Stocks Are In Or Near A Buy Zone Right Now?
Simply scroll through IBD screens to find highlights of top-rated stocks in or near a potential buy range. It's a simple, effective and fast way to build your watchlist.
3. Evaluate Your Stocks And Plan Your Trades With Stock Checkup And IBD Charts
Under the "Research" tab on Investors.com, go to: IBD Stock Checkup | IBD Charts
What's the most effective way to maximize your profits and minimize risk? Always check both the company's "fundamentals" (e.g. sales, earnings, products and industry trends) and "technicals" (e.g. price and volume action, support and resistance in the chart).
That combination gives you a major advantage over investors who only look at one or the other.
Does Your Stock Pass Or Fail?
IBD Stock Checkup gives you pass, neutral or fail ratings for the most important stock-picking criteria. Just enter the ticker for an instant diagnosis of your stock. (See how to diagnose your stocks.)
Time To Buy, Sell Or Hold?
Additionally, before you buy a stock use IBD Charts to make sure it's in a proper buy zone. And use charts to see the right time to take your profits and minimize risk.
Also see: Free investing lessons on How To Buy Stocks | When To Sell Stocks | How To Read Stock Charts
How To Invest: Find The Best Stocks To Buy Before They Break Out
IBD stock lists help you speed up your research. You'll also find alerts to stocks in or near a potential buy zone in the chart analysis provided for each name on IBD Sector Leaders, IBD 50, IBD Big Cap 20, IPO Leaders and Stock Spotlight.
Regularly monitor these stock lists and indexes using a buying checklist and selling checklist as part of your investing routine. Also, be sure to check the IBD Breakout Stocks Index, updated weekly.
Checking these screens regularly is a proven way to help improve your investing results by quickly building a high-quality, actionable watchlist. Using this simple three-step routine will also help protect your profits and keep any losses small in weak markets.
Follow Matthew Galgani on X (formerly Twitter) at @IBD_MGalgani.
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