As an active trader, I look every morning at the market's top leaders and laggards in the hopes of spotting profitable opportunities. In some cases, I think a fast-rising stock may have further upside. In other cases, a stock being sold off starts to look like a real value. When this happens, I want to move fast. It often takes only a few days -- or even a few hours -- for the investing herd to catch up.

When time is of the essence, here are some quick tips on how you can assess a situation before plunging in.

If A Stock Is Rising…

Revise the estimates. An especially useful tool during earnings season, quickly revising analyst estimates can give you a sneak peek at the stock's potential future price.

For example, if a company just announced it beat second quarter estimates by $0.10 a share, then you can assume that EPS estimates need to be raised by at least $0.30 for this year (2nd, 3rd and 4th quarters) and at least $0.40 for next year. Divide today's price by your new earnings forecast to see if today's P/E indicates whether the stock is a bargain or not.

Keep in mind that you need to consider management's guidance during this exercise. If a company reports strong quarterly results and management confirms the trend is sustainable, then you can quickly go through the exercise I outlined above.

But sometimes companies adopt an unspoken strategy of setting a low bar so they can consistently beat it. If you suspect that management is purposefully managing expectations and being too conservative, go back to past press releases or listen to archived conference calls (which can be found on the company's web site). If management always sets a low bar -- and then exceeds it -- you can adjust management forecasts upward in anticipation of this 'surprise' event.

Check out the competition. It's important to listen to what other industry players are saying. A key rival who expresses caution about industry demand is definitely cause for concern. Generally, it's best to stick with industries where the component companies have reached consensus on the macro outlook.

If you're faced with a case of one company who's bullish while another is bearish, it may simply be a function of market share shifts. Try to develop a sense of why the two firms are at odds. Maybe one has problems with its sales force. Or perhaps key customers are postponing purchases while they wait for a new product to come out. Short-term factors like these are rarely sustainable, so concentrate on the longer-term trends when it comes to market share.

You also want to focus on what a company's peers are saying about profit margins. If competitors are seeing weaker margins because of slowing revenue growth (as opposed to higher expenses), it may be a sign that industry pricing pressures will eventually come home to roost for all players.

Follow up. One of the perils of moving fast is that you may miss something. As a general rule of thumb, the less time you spend analyzing a company before deciding to buy it, the more time you should spend on researching it over the next few days.

Often times it takes a day or two for all information to filter out. That's why I always read a company's 10-Q as soon as it's filed. Management will often hide less savory bits of information in these filings, such as a management change or even a modification to the numbers posted in a press release.

The few days after you hastily buy a stock are crucial in terms of share price follow through. If a stock fails to respond further to good news within a few days, or even falls back, it may make sense to cut your position and hold off re-buying until you've had a chance to dig much deeper. Roughly half of all quick decisions I make are subsequently reversed once I have time to dig deeper. There's no shame in buying and then changing your mind later, especially with the low trading commissions offered by discount brokers.

If your stock is only treading water while the rest of the market is down, then it is likely to start rising again once the market stabilizes. One of my favorite sources of fresh ideas is to seek out stocks that are trading flat in a lousy market. That indicates there are enough buyers to help offset the automated selling by computer-based trading systems. Once the selling pressure abates, the buyers have the trading action all to themselves.

If A Stock Is Falling...

Understand why sales are declining. It's a given that falling stocks are cheap, or at least cheaper than they were before. But some stocks will stay cheap for a long time, while others are ripe for a bounce back. Pay particular attention to any company announcements about sales weakness. Identifying the underlying problem can give you terrific insight into the catalysts (or lack thereof) for a stock price bounce back. Two recent examples come to mind.

Earlier this month, I noted the sales shortfall from medical device maker Conceptus (Nasdaq: CPTS) and suggested that management was mistakenly blaming its sales force for poor execution (read the full article here). After looking more closely at the claim, I discovered that more than likely, external factors like weak demand are to blame. But even if the problem could be fixed by re-focusing sales efforts, an effort like that can take several quarters to iron out.

I also looked at CommVault (Nasdaq: CVLT) and found that it too has been suffering from poor sales execution, but for a different reason (read the full analysis here). The software vendor is about to release an upgraded version of its key Simpana platform, so it makes sense that customers would hold off in anticipation of that upgrade.

Check the balance sheet. When stocks fall on disappointing sales and profit announcements, run directly to the balance sheet. Companies with lots of cash can ride out downturns and perhaps even buy back stock while the price is depressed. But companies with lots of debt are ill equipped to withstand a rough patch. The greater the balance sheet distress, the less likely a company is able to afford any badly-needed investments to get sales back on track.

For more ideas on how to trade in these markets, check out David's featured article: One Way to Catch a Falling Knife.