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Step 11: Price Chart

Check the price chart before you buy. Growth stocks should be in an uptrend, meaning the price should be above both its 50-day and 200-day moving average when you buy. The ideal buy point is when the 50-day MA has just recently moved above the 200-day MA. There is added risk if the stock has already made a big move up, that is, if the share price is more than 50 percent above its 200-day MA.

Impath was trading at $48, above its 50-day moving average and more than 60 percent above its 200-day MA in June 2000.


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