Chapter 07 · 2 min
The Stock Funnel Cheatsheet
Most mistakes do not happen because we have never heard the right rule. They happen because the rule disappears at the exact moment a stock becomes exciting. This page is the version to keep nearby when you need the method without the full explanation.
Do not treat every item as a box that must be checked. Treat the sequence as a brake on storytelling: each step forces the idea to survive a different kind of question.
1 · Discovery
Why is this stock on the list?
An unusually large daily gain or expanding demand earns attention—it does not earn a buy decision.
2 · Price structure
Did price leave a real range?
Identify the base, resistance level, breakout volume, closing strength, and whether the old boundary became support.
3 · Explanation
What changed?
Look for a specific, timely catalyst that could reasonably change expectations for revenue, earnings, risk, or future value.
4 · Confirmation
Does the evidence support the move?
Check liquidity, persistent demand, business growth, ownership, valuation, cash generation, and analyst context.
5 · Risk
What can invalidate the thesis?
Name the level, event, or evidence that would prove the original explanation wrong. Include dilution, volatility, and low-float risks.
6 · Decision
What happens next?
Research further, wait for confirmation, or reject the setup. A strong move is allowed to end with no action.
Fast warning signs
- × No identifiable catalyst
- × Weak close after an intraday spike
- × Price falls back below resistance
- × Low dollar volume or poor liquidity
- × Low float or recent dilution
- × Valuation unsupported by growth
- × Demand disappears after day one
- × No clear invalidation point
The goal is not to find a reason to buy. The goal is to reach a decision the evidence can support.Use the cheatsheet on Daily Gainers
For educational and research purposes only. No score or classification guarantees future performance.