1. Pick a Stock

Obviously, the first thing you have to do when looking to leg into a stock position is choose the stock you would like to leg in to. When you are looking at various stocks to leg in to, you should be looking for stocks that have a strong fundamental foundation. You should also be looking for stocks that have established a strong support level on their charts. This is especially important when you are looking to leg into stocks in a bear market. If a stock has not established a strong support level on its chart, chances are good that the stock is going to continue falling until it reaches a price level that will serve as support.

[To learn more about how to determine if the stock you are looking at has a strong fundamental foundation, check out Fundamentals the Easy Way—one of our easy-to-understand articles and videos.]

For this example, let's choose Archer Daniels Midland Company (ADM). ADM is in the business of procuring, transporting, storing, processing, and merchandising agricultural commodities and products. While most stocks have been taking it in the teeth lately, ADM seems to be doing relatively well. On November 4, 2008, ADM released their quarterly numbers and announced record quarterly net earnings of $ 1.05 billion for the quarter ended September 30, 2008, up 138 % from the period a year ago. Net sales increased 65 % to $ 21.16 billion. Not too shabby. Fundamentally speaking, ADM looks to be doing okay.

Looking at the daily ADM chart, you can see that the stock has been rising steadily for the past month or two after hitting a low of $13.53, which is encouraging. Any time you see a stock hit a low and then proceed to form a series of higher highs and higher lows, you know you have a good chance of catching a new uptrend.

Plus, this move by ADM is even more encouraging when you take into account what is happening in the stock market overall. The Dow Jones Industrial Average has been falling almost the entire time that ADM has been rising. Any stock can rise when the entire market is rising, but it takes an exceptionally strong stock to rise when the entire market is falling. ADM is showing remarkable relative strength right now. If it continues to move the way it is, it will keep moving higher while the market is struggling, but it will be in a position to truly take off and move higher when the market finally turns around and ADM is no longer swimming upstream.

This special report continues on the next page...

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3.25 Copyright (C) 2007 Alain Georgette / Copyright (C) 2006 Frantisek Hliva. All rights reserved."