Gary Revisits His Long Strategy

I've been getting a fair amount of questions lately on my long strategy, which I have fondly named the GBS Classic. (I am sincerely hoping it's a self-fulfilling prophecy.) Therefore, I thought I'd revisit it one more time, update you on some changes I've made and give you a progress report on its 1998 performance.

The first thing you should do is go back to the archives and read through my Sept. 8 column. This will give you my rationale for why I trade this way. It also has a few "hows," and I'll elaborate on those for the remainder of this column.

The first major change, and one I alluded to in a Q&A column, but should have made clearer, is how I screen my stocks. Yes, I always look for stocks hitting new highs coming out of congestion. But I get this list by simply picking the bold-faced stocks from Investor's Business Daily under the column NYSE (or Nasdaq) Stocks with Greatest % Rise In Volume. In a tip of the hat to the fundamentalists, these stocks are all above the 80th percentile in earnings, and though I don't care about a stock's fundamentals, these seem to hold up better when the market gets rough. In addition, these stocks also are in the 80th percentile in relative strength, which is exactly what you want with this kind of momentum strategy. ...