U.S. Markets close in 6 hrs 17 mins

Focus On Price, Volume Data, Not Analysts' Buy, Sell Ratings

There is really no shortage of information in the stock market. From the Internet, TV and other media, there's always some kind of information spewed to investors on which stocks to buy or sell.

Buy, sell and hold ratings are some of the most common pieces of information from Wall Street, but investors for the most part should not pay much attention to them.

Instead, focus on what the chart is telling you. In other words, pay attention to key developments in the stock's price and . When strong demand for shares creates bullish chart patterns, such as the cup with handle or other key pattern, a reliable emerges.

It's not that analysts don't know what they're doing. Most know a lot about their companies. They pore over financial statements, visit management, customers and suppliers. They have a firm grasp of what's going on in the industry.

But investing isn't as easy as following someone else's buy, sell or hold recommendations. At times, one brokerage house can rate one stock a buy, while another rates the same stock a sell. Conflicting recommendations can cause confusion for investors.

Other times, an analyst can slap a sell rating on a stock. But instead of going down, the stock goes up or vice versa. Analysts can absolutely be right by slapping a buy rating on a stock with red-hot growth rates. But the stock may not go anywhere due to general market weakness.

Analysts' opinions are just opinions. Rely on facts.

Price and volume activity on daily, weekly and sometimes monthly charts are all investors really need to follow. A price chart is a picture of a stock's past trading activity. You can see the highest, lowest and closing price for a specific time frame.

Over time, what gets printed on a chart will tell you whether the stock is acting healthy or if if something bad is setting up.

On July 16, Tesla Motors (TSLA) plunged 14% in huge volume after Goldman Sachs put out a note saying that shares of the electric car maker could be worth as little as $58, or less than half of what they traded at the time.

Tesla fell a little more the next day, but then staged a big upside reversal after getting support at its 10-week moving average. (1)

The stock, which is a member of IBD Leaderboard, continued to bounce off the key moving average and bolted 46% from its July 16 close by Aug. 8. (2)