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Seven signals of a rising stock price

Are there signs a stock price will go up? Yes, that's the good news. The bad news is that it is difficult to recognize those signs before everyone else does. By the time you can see and act on those signs, the professionals will have already bought which will have driven the price up. People who watch the stock market full time have that advantage.

That said, what are some of those signs?

1. A new technology or other discovery that will provide an advantage in the marketplace. This might be new hardware from a computer or semiconductor company, a new oil field discovery from an oil company etc. This kind of development tends to take years to pay off but it does indicate a likely increase in the stock price.

2. Introduction of a new product, or better yet, a new line of products that is expected to be very profitable. Be careful here, not all such products pay off. (Remember the Edsel?)

3. Potential buy-out by another company. This often drives the price up as the buying company sweetens the pot in an effort to acquire controlling interest. Caution: If the buy-out fails the stock price will probably fall back to where it was. If you bought after the price started to increase you could lose money.

4. Management changes. If the company has been poorly managed, a new team may be able to turn it around. Of course before jumping on this you need to know that there is room for improvement and that the new team is capable of that improvement.

5. Changes in the market. If customers begin to need or want some product the company produces, it's stock may begin to go up. For example, the current emphasis on bio-fuels is increasing demand for corn and other agricultural products. If a company makes something that could replace a scarce commodity, that is an opportunity for the company.

6. A major competitor has problems. A company can benefit from its competitor's troubles by grabbing market share. Be careful that the same trouble doesn't affect the company whose stock you are considering.

7. Insider trades. Trade publications often list which corporate officers are selling or (less often) buying their own stock. There are laws about how they can use inside information but still it says something if two or three corporate officers stop selling their options or stock, or even start buying. They have to make public any information they used in their trading but if insiders are bullish, it probably bodes well for the company.

Of course none of these indicators alone is adequate for


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