How to Identify the Best Stocks and Avoid the Worst

Welcome to the Beginners in Stock Trading Newsletter! Over the next several months, you’ll receive expert insights, proven strategies, and real-world examples from some of the greatest stock traders in history.

Every newsletter has 2 sections. The 1st section is devoted to learning. Each building on the previous day’s lesson in logical order. Giving you a full, free trading education in under ten minutes a day.

Missed a day? You can find all of the previous newsletters online to catch up or if you joined later.

The 2nd half of the newsletter is a briefing on 1-3 stocks in the news. Read it. Then click on the links to see the corresponding charts inside the original articles. This will accelerate your ability to read the charts.

Learning to how to trade will change your life.

Not all stocks in a sector perform equally. Some lead the market higher, while others struggle to keep up. If you want to maximize gains, only buy market leaders and avoid laggards.

To be on the right side of the market, you must trade in the strongest stocks, in the strongest industries, in the strongest markets.

✅ High Relative Strength (RS) Rating (80+) – Stocks with high RS outperform their peers.
✅ Explosive Earnings & Sales Growth – Leaders have strong fundamentals.
✅ New Highs on Strong Volume – Leaders break out and hold gains.
✅ Institutional Sponsorship – Hedge funds and mutual funds buy leaders, not laggards.

📖 O’Neil’s Study of Super Stocks:

❌ Low RS Rating (Below 70) – Underperforming stocks often continue to underperform.
❌ Weak Earnings Growth – Flat or declining profits = no real demand.
❌ Failing to Make New Highs – If a stock lags behind its industry, it’s weak.
❌ Heavy Distribution Days – If institutions are selling, stay away.

📖 Example of a Laggard:

📌 Follow These 3 Steps to Spot the Best Stocks:

✅ Step 1: Use Relative Strength Ratings

✅ Step 2: Check the Industry Group Strength

✅ Step 3: Watch for Institutional Buying

📖 Example:

✅ Go to IBD’s RS Screener or Finviz.
✅ Look for stocks with RS ratings above 80.
✅ Check if they belong to a strong sector.

👉 Write down 3 potential leaders in your trading journal.

Tomorrow, we’ll discuss institutional sponsorship—why following big investors can help you find the next big winners.

🚀 Stay disciplined & keep learning!

📌 Understanding stock price growth:
Look up the historical stock chart of Apple (AAPL) from 2004 to 2024. Notice how the stock’s price has risen steadily over time with some pullbacks.

Use these market tools to scan for and review stocks:

✅ MarketSmith (MarketSurge) – Premium Market Analysis and Scanner Tool
✅ Charts.com – Budget-Friendly Charting Option
✅ TradingView – Free & Subscription Stock and Crypto Charts
✅ DeepVue – MarketSurge Inspired Analysis and Scanner

👀 Seeing real-world stock patterns helps train your eye for long-term trends.

Our Sister Newsletter. Because everyone’s a Beginner in something.

April 2025 was a month of chaos in the stock market! 🤯 President Trump's tariffs led to waves of financial anxiety, causing major ripples across various sectors. We saw Apple's and Tesla's stocks take a nosedive, while Nvidia, surprisingly, reversed its course. Analysts issued warnings of nearly $5.9 billion in potential losses as Bitcoin slipped below the $80,000 mark. It was a time when everyone was on high alert, questioning the next move!

Yet, in the eye of the storm, Cathie Wood made waves by investing a whopping $9 million into a Dow giant. Is this a bold move or a risky gamble? As the Dow Jones tumbled 1,500 points, we saw global supply chains strain under pressure, and companies like Howmet and Nintendo declared force majeure. It's a rollercoaster ride, folks, and you won't want to miss the twists and turns!

👉 Dive in for more market insights!

Bitcoin took a significant hit, dropping below $80,000 and sparking concerns of a potential $5.9 billion loss. The digital currency world is buzzing, and investors are holding their breath. This decline comes amid widespread tariff turmoil, adding more stress to an already edgy market. Can Bitcoin bounce back, or is this just the beginning of a deeper dive?

With the Nasdaq leading the market into bear territory, caution is the name of the game. Analysts are urging investors to hold onto cash during these turbulent times, waiting for that golden opportunity. As uncertainty looms, Gold and dividend stocks are emerging as safe havens, while the IPO sector faces setbacks. The question remains: will Bitcoin recover, or is now the time to seek shelter?

In the midst of market volatility, many investors find themselves seeking refuge in stable, resilient stocks. One such financial stalwart is Virtu Financial (VIRT), a company that thrives on market fluctuations. Unlike many stocks that waver under the pressure of economic downturns, Virtu Financial has demonstrated impressive resilience, a trait that sets it apart in the financial sector.

Understanding a stock like Virtu Financial not only enhances your trading portfolio but also improves your trading knowledge by illustrating how certain companies can leverage volatility to their advantage. When market uncertainty prevails, stocks like VIRT can offer both security and opportunity.

5 referrals How to Make Money in Stocks Complete Investing System by O’Neill

10 referrals How to Make Money in Stocks Success Stories by O’Neill

15 referrals How to Make Money in Stocks, Getting Started by Matthew Galgani

30 referrals Trade Like a Stock Market Wizard by Mark Minervini

50 referrals Lifetime access to the upcoming video courses and 50% off live events and digital products

Thank you for reading. We’re all Beginners in something!

-Beginners in Stock Trading Team