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SWEET SPOT.
The first thing any new VectorVest user should know is that high VST stock prices tend to go up and low VST stock prices tend to go down. While we have demonstrated this phenomenon with thousands of tests over a period of many years, it's still hard to believe.

Even I occasionally find myself doubting that some of these high VST stocks can go higher, but they do. Take Spartan Motors, for example: On April 27, 2006 its VST popped from 1.21 to 1.43 on a 24.11% gain in price and a 4,523% surge in volume. There it was in the ranks of the VST elite at $9.33 per share. I'd be lying if I said I bought it at that price, but I smiled when I saw it. I remembered Spartan Motors from a long time ago. It had a heck of a run in the early nineties, so I watched it. I finally bought it in September at just under $13 a share. It moved nicely to $16, rested for several months; then exploded to $24. I sold it shortly thereafter at about $22.50. Cramer recommended it at about $25 in April and I thought, "Boy has he missed the boat." But you know what? SPAR closed yesterday at $35.06 a share. Unbelievable!

Yes, a lot of high VST stocks soar beyond belief. Unfortunately, some of them crash and burn after their glorious flights. Maybe Spartan will also dive one of these days. So don't tell me about NTRI, HANS, TIE, SIM, GROW, AXR, ROCM and many others. I know all about them. But that's the way it is. The trend is your friend until it comes to the end. Comes to the end? That's where the problem is. I don't want to pick stocks that are coming to an end. I want stocks that are at the beginning. How can we do that?

Well, I tried to answer this question a couple of months ago. Remember my essay of April 5, 2007, "Cherry Picking for Big Winners?" That's when we showed you how the "High CI Prospects" strategy worked. On April 13, 2007 we gave you more pointers for cherry-picking big winners. Then on April 20, 2007, we began delivering a WatchList of High CI Prospects that we like the best. It's called "HCIP Favorites." We do all the work. All you have to do is open the WatchList and pick the winners you like. What can be simpler than that? Ten of the of twenty-two stocks in the first 04/20/07 WatchList of HCIP Favorites were showing annualized gains of over 100% as of last night. Not bad.

Another strategy that finds high VST stocks ready to soar is Gordon White's "High-VST Newcomers." This strategy is elegant in its simplicity. It has only one line of code. It finds stocks whose VST has gone from < 1.40 to > 1.40 over the past week, ranked by VST descending. Stocks which make it to a VST of 1.40 or greater are the stocks to watch. This is the mother lode. As of last night, there were only 154 in the database. How should we mine this data?

Typically we would go straight for the highest VST stocks. These stocks make money, but sometimes they're overextended. We can solve this problem, however, by simply picking high VST stocks with RT values below a certain maximum. But we have to be careful here. If the max RT level is too high, we may still be picking overextended stocks. If the max RT level is too low, we may be picking stocks that are actually heading south. So we want to be somewhere in between, picking hot stocks but not those that are too hot. To see how it's done, visit the VectorVest University and enjoy this week's "Strategy of the Week," called Sweet Spot.