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The comments expressed here are based upon study and interpretation of available data as it relates to our historical models of the best-performing stocks.

1 The comments expressed here are based upon study and interpretation of available data as it relates to our historical models of the best-performing stocks. This is not a prospectus; no effort on our part with respect to sale or purchase of any securities is intended or implied. Any chart appearing in this material is for educational purposes and is not, and should not be construed as a recommendation or rating to buy or sell any security. It is possible that at this date or some subsequent date, the officers, directors and/or shareholders of Investor s Business Daily, Inc. or their affiliates own securities or buy or sell securities listed in the following pages, or those not mentioned. Investor s Business Daily, IBD, CAN SLIM and corresponding logos are registered trademarks owned by Investor s Business Daily, Inc. 1

2 Why Market History Matters Basic Buying Checklist Prepare to Profit: How to Track Bases As They Form How to Find Leading Stocks Forming Bases Using IBD Take the IBD 5-Day Chart Challenge 2

Why Market History Matters a Best stocks show same patterns before they surge Selected Cup-with-Handle Examples: 1885 2010 (From How to Make Money in Stocks) 1885 Richmond & Danville 1915 General

3 Why Market History Matters a Best stocks show same patterns before they surge Selected Cup-with-Handle Examples: (From How to Make Money in Stocks) 1885 Richmond & Danville 1915 General Motors 1926 IBM 1934 Coca-Cola 1944 Conde Nast 1958 Texas Instruments 1963 Xerox 1970 McDonald s 1982 Home Depot 1990 Cisco Systems 2002 ebay 2003 Deckers Outdoor 2004 Apple 2007 First Solar 2009 Priceline a Find tomorrow s big winners: Look for stocks showing same patterns right now. 100 Biggest Winners Since 1885 See Chapter 1 in How to Make Money in Stocks for detailed look at chart patterns of biggest winners over last 100+ years. 3

- But always search for leading stocks forming bases: 90% of bases form during market correction.

4 Basic Buying Checklist a Fundamentals First - Focus on companies with superior earnings and sales growth, return on equity and other CAN SLIM traits. a Check Market Conditions - Only buy when market is in confirmed uptrend. - But always search for leading stocks forming bases: 90% of bases form during market correction. a Check Chart for Potential Base & Buy Point - Best stocks make biggest moves after breakout from sound base. - Waiting for buy point lets you reduce risk and still reap rewards. 4

5 Prepare to Profit: How to Track Bases as They Form a Prepare - Identify potential chart pattern and buy point. - Check overall market direction: Uptrend or Correction? a But Wait for Buy Point - Don t jump in too early. - Let stock prove itself by forming base and breaking out. - Look for big volume at buy point to confirm investor support. Do I have to buy at the EXACT buy point? The closer to the buy point the better, but a stock is in buying range up to 5% past the buy point. Buy Point Buying Range: Up to 5% past buy point 5

6 Prepare to Profit: How to Track Bases as They Form View examples of successful chart patterns as they happen... a Cup-with-Handle a Double-Bottom a Flat Base 6

7 Apple (AAPL) Cup-with-Handle WEEKLY CHART New Product: ipod revolutionizes music industry. Prior Uptrend 6 weeks of tight closes. Big investors quietly buying up shares. Buy Point: peak in Pulls backhandle to + 10 cents Base 10-week forming line. during Will market it find support? correction. Forming right side of cup? Recaptures 10-week line. Peak of handle Moving up? Wait for breakout from buy point on big volume. Cuts through 10-week line. Will it head south or find bottom? Volume mostly below average. Big investors not dumping shares. Seems to be forming cup-shaped base. Forming handle? Price drifts sideways. Big volume on up week. Big Volume 82% above investors buying shares. average. Shows big investor support. Volume lightens. 7 7

8 Apple (AAPL) 2004 Cup-with-Handle Can you also see the pattern in this DAILY chart? Daily vs. Weekly Charts Buy Point: peak in Weekly: Longer term perspective. Can Peakbeineasier handleto see pattern. handle + 10 cents Daily: Identify exact buy point and volume at breakout. Track daily action. Support at 50-day line Huge volume at breakout 8 8

9 What Happened Next? Apple gains 1,534% in 99 weeks Weekly Chart Buy 9 9

10 Wesco International (WCC) 2005 Cup-with-Handle WEEKLY CHART Peak in handle Buy Point: peak in handle + 10 cents Prior Uptrend Cup-with-Handle Big volume at breakout Take closer look with DAILY chart 10 10

11 Wesco International (WCC) 2005 Cup-with-Handle DAILY CHART Prior Uptrend 126% gain in 28 weeks from buy point Peak in handle Wait! Doesn t clear buy point. Buy Point By waiting for proper breakout, you avoid a loss. Breakout is ABOVE 50-day line Buy points below Support: 50-day Support: big line volume more good prone volume down to failure day, as but bounces stock off climbs 200-day higher line Volume above average. Picks up in following days

12 CME Group (CME) 2005 Double Bottom WEEKLY CHART Story: 2002 IPO first exchange to go public. Global expansion and increase in options trading fuels growth. Prior Uptrend Middle peak 3 weeks in W down. Cuts through Recaptures 10-week line. 10-week line. Buy Point: middle peak in W + 10 cents Rally fails. Stock pulls back again. Undercuts first leg down in W. Will it continue 4 weeks closing at top of down or move higher? range for week: ShowsForming right side of W? support. Wait for stock to clear buy point in big volume. Above average volume on sell-off. Heavy volume at breakout 12 12

13 CME Group (CME) 2005 Double Bottom Can you also see the pattern in this DAILY chart? Middle peak in W Gap up in big volume in base: sign of support. Buy Point: middle peak in W + 10 cents Support at 50-day line Relative Strength line in new high territory at breakout Huge volume at breakout 13 13

14 CME Group (CME) 2005 Double Bottom 224% gain in 113 weeks WEEKLY CHART Buy 14 14

15 MindSpring Enterprises (MSPG) 1999 Double Bottom Story: 1996 IPO. A leading Internet service provider during dotcom boom. WEEKLY CHART Buy Point Middle peak in W Prior Uptrend Weekly volume light at breakout, but daily volume well above average (See daily chart) Support: closes above 40-week line 15 15

16 MindSpring 1999 Double Bottom Can you also see the pattern in this DAILY chart? 179% gain in 10 weeks from buy point Middle peak in W Buy Point Tight closes show support, accumulation Support: closes above 200day line on huge volume Again finds support at 200-day line Heavy volume at breakout 16 16

17 Deckers Outdoor (DECK) 2007 Flat Base WEEKLY CHART Peak in base New Product: Popularity of Deckers Ugg boots drove earnings and stock price. Pulls back to digest Breaks through prior big gains buy point Prior uptrend Meets 5-week min. length for flat base Shallow decline. Finds support at 10-week line Big volume at breakout 17 17

18 Deckers Outdoor (DECK) 2007 Flat Base Can you also see the pattern in this DAILY chart? Peak in base Buy Point: peak in base + 10 cents Big down day actually shows support: Closes above 50-day moving average line Closes in upper half of day s range Huge volume at breakout 18 18

19 What Happened Next? Deckers gains 173% in 46 weeks Weekly Chart 2007 Flat Base 19 19

20 Tenaris SA (TS) 2005 Flat Base WEEKLY CHART Booming Industry: Demand for natural gas and oil drives earnings of pipe-maker Tenaris. Buy Point Peak in base Prior uptrend Recaptures 10-week line Flat Base Big volume at breakout 20 20

21 Tenaris (TS) 2005 Flat Base Can you also see the pattern in this DAILY chart? 367% gain from buy point Buy Point Peak in base Flat Base Support: big volume as stock Huge volume at line recaptures 50-day breakout 21 21

22 See a Pattern? Weekly Chart Buy Point Buy Point Cup-with-Handle (2005) Flat Base CB Richard Ellis (CBG) 2004 Base forms right after IPO Housing boom helps this real estate developer 22 22

23 See a Pattern? Weekly Chart Buy Point: Just 2 trading days after new market uptrend begins. Peak in handle Market rebounds: Enters confirmed uptrend Cup-with-Handle Base forms while market is in correction. Green Mountain Coffee Roasters (GMCR) 2009 Hot product: K-Cup drives surge in earnings Accelerating sales growth: 43% - 60% in prior 4 quarters Weekly volume light at breakout. 12% above average on day of breakout

24 See a Pattern? Weekly Chart Flat Base Breakout Cup-with-Handle Breakout Flat Base Offers additional buying opportunity Cup-with-Handle Gartner Group (IT) 1994 New IPO Leading IT consulting company benefitting from PC & tech boom 24 24

25 See a Pattern? Weekly Chart Buy Point Double Bottom EMC Corp (EMC) 1992 Demand for EMC s IT services surges as companies expand computer networks 25 25

26 How to Find Leading Stocks Forming Bases Using IBD Here are just a few ways to find stocks in bases using IBD and Investors.com: a Daily Stock Analysis a Mini Charts in The IBD 100, Big Cap 20 and Your Weekly Review a Stocks Just Out Of Bases a Search on Investors.com 26

Daily Stock Analysis - Detailed look at a

Watch the Video Read the Article (See IBD TV tab

27 Daily Stock Analysis - Detailed look at a leading stock, often forming base or near potential buy point - Get stock ideas and improve your chart-reading skills at same time Watch the Video Read the Article (See IBD TV tab on Investors.com) (See paper, and Education tab on Investors.com) 27

28 Mini Charts in IBD 100, Big Cap 20 & Your Weekly Review Stocks with strong fundamentals and sound base patterns highlighted with black border IBD 100: Mondays IBD Big Cap 20: Tuesdays Your Weekly Review: Fridays See brief analysis of current chart action. Can you see the pattern mentioned? 28

Base? Each day, pull up an IBD Chart for any stocks listed and see

29 Stocks Just Out Of Bases - At top of NYSE + Nasdaq Research Tables - Stocks usually within 5% - 7% of ideal buy point Can You Spot the Base? Each day, pull up an IBD Chart for any stocks listed and see if you can spot the type of base the stocks formed and the buy point. 29

30 Search on Investors.com - Search for mentions of common chart patterns: cup-with-handle, double bottom, flat base, 3-weeks tight, etc. - Narrow results by date, section, and more to find mention of stocks in or just out of bases (1) Search site for chart pattern name. (2) Use left side of results page to focus your search. 30

Put a stock s chart action in perspective by understanding overall market direction. a Which stage is the market currently in? Market in confirmed uptrend: Best time to buy stocks.

31 Take the IBD 5-Day Chart Challenge Improve your chart-reading skills and get stock ideas at the same time. Do steps 1 3 over the next 5 days, and see what a difference a week can make in your investing skills. 1. Check Market Pulse in The Big Picture every day. Put a stock s chart action in perspective by understanding overall market direction. a Which stage is the market currently in? Market in confirmed uptrend: Best time to buy stocks. Uptrend under pressure: Be cautious and ready to sell. Increasing distribution (selling) may push market into correction. Market in correction: Don t buy stocks. Look for stocks forming bases as you wait for new uptrend to begin. Where: See The Big Picture on A1 in IBD or read it on Investors.com. 31

2. Watch the Daily Stock Analysis video every day. See how an IBD expert evaluates a leading stock and its chart action. a What chart patterns are mentioned? chart for same stock on Investors.com.

32 2. Watch the Daily Stock Analysis video every day. See how an IBD expert evaluates a leading stock and its chart action. a What chart patterns are mentioned? chart for same stock on Investors.com. Can a View you see the pattern? Any potential buy point? stock to My Stock Lists on Investors.com. a Add Track subsequent chart action. Does it find support? Break out? Break down? Where: Under IBD TV tab on Investors.com. Or read the DSA article in IBD or on Investors.com. 32

33 3. Study past winners. The best way to find tomorrow s top stocks is to study the charts of past winners. a Download free chart-reading booklets from IBD Get detailed insight into the 3 most common patterns See annotated examples of past winners Learn to spot the same patterns in today s stocks Cup-with-Handle Double Bottom Flat Base Where: Download the booklets for free at: 33

Coming Next Month Lesson 5: Why Cutting All Losses is Critical to Success You ll learn how to: aavoid big losses in any market by following one simple rule ause charts to spot signs of trouble early

34 Coming Next Month Lesson 5: Why Cutting All Losses is Critical to Success You ll learn how to: aavoid big losses in any market by following one simple rule ause charts to spot signs of trouble early amake money even if you re wrong 3 times out of 4 when choosing stocks and more! Stay in Touch! Get the latest updates from IBD on Twitter and Facebook! facebook.com/investorsbusinessdaily twitter.com/ibdinvestors 34

35 The comments expressed here are based upon study and interpretation of available data as it relates to our historical models of the best-performing stocks. This is not a prospectus; no effort on our part with respect to sale or purchase of any securities is intended or implied. Any chart appearing in this material is for educational purposes and is not, and should not be construed as a recommendation or rating to buy or sell any security. It is possible that at this date or some subsequent date, the officers, directors and/or shareholders of Investor s Business Daily, Inc. or their affiliates own securities or buy or sell securities listed in the following pages, or those not mentioned. Investor s Business Daily, IBD, CAN SLIM and corresponding logos are registered trademarks owned by Investor s Business Daily, Inc. 35

2011 Investor s Business Daily. All rights reserved.

2011 Investor s Business Daily. All rights reserved. The comments expressed here are based upon study and interpretation of available data as it relates to our historical models of the best-performing stocks. This is not a prospectus; no effort on our part