Technical Stock-Picking: How to Trade Off of a Stock Chart

Step 2. Research the Stockpickr portfolio database to find five companies that you think will increase the most in price this week, on a technical basis. Don't do any fundamental research, just focus on the chart as well as the immediate cause of the price rise. Analyze the stock's price and volume changes over different time periods, including one year, six months, one month and one day.

In addition to Altucher's rocket stocks for the week, look at the following portfolios:

• Stocks Rising on Unusual Volume: This portfolio captures the philosophy behind technical trading. Look at the stock charts over various time periods to see whether this is just a temporary rise or whether it has occurred in the past. Check out news about the stock to find the immediate cause of the rise.
• 52 Week Highs: Certainly achieving a new high is a reason to look further. However, if the high is on relatively weak volume, you may be looking at a "bear trap," in which case the price will drop.
• Stocks With Unusual Options Activity: If investors are buying a lot of call options , this could signal an imminent price spike upwards. Confirm by looking at the chart.
• Unusual Volume System: This is one of Altucher's System Trades of the Day, based on monitoring stocks that have risen on larger than usual volume.

Find stocks that you think will rocket. Document your reasoning in the "Reason?" box. Enter the stock high, low, close and volume for that day as well.

Step 3. After the close of the next trading day, enter the high, low, close and volume in the "Reason?" box. Is the high price on high volume trend continuing, or is it time to sell?

Step 4. Repeat Step 3 for the next four trading days, developing a weekly history of the stock's price and volume performance.

Step 5. At the end of the week, compare your results with Altucher's rocket stock portfolio for that week (example: "Rocket Stocks for the Week of Dec. 31"). Did your picks match any of his, or did you find better ones?

A company's can have great fundamentals and have a lousy chart. The reverse is also possible -- a company on the verge of bankruptcy with a chart that indicates short term profit potential. Ideally, the fundamentals and technical characteristics of a stock reinforce each other. They're both important weapons in your fight for stock market profits.

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