Sunday, May 20, 2018

$VNOM  Growth  Stock  Story

Barron's had a detailed article on Mr. Jack Bogle (inventor of index funds).  He is a highly respected man in the financial industry for what he did for the passive retail investor.  Research however shows that from 2005 to 2017, traditional index funds have performed  + 8.4%  while actively managed funds have returned a measely  +7.2%.  For the etf's (trades like a stock), it is even worse with just  +5.5%  return.  Retail investors and traders who actively manage their portfolios can do better.  One has to put in the time and effort to be engaged with the market on a daily basis and research for Growth Stocks that Out Perform the Market.

$VNOM  is a Growth Stock.  Just 5 months ago (Dec 2017), it was just a  $20  stock and was trading merely 200,000 shares per day ($4 million trading volume/day).  Today it is a $31.78  stock (+59% in less than 20 weeks).  It is trading over 700,000 shares per day ($22 million trading volume/day).  What causes the stock to make a sudden move like this with over  5  times the daily trading volume from  $4  million to  $22 million within 20 weeks?  It is the institutions that have the buying power that propels the stock.  They account for over  75%  of the trading volume in the stock market everyday.  They leave behind a foot print and it is very hard for them to conceal their desire for wanting more shares of a stock.  That is how all the high priced Growth Stocks like $AMZN, $GOOGL, $NFLX, $FB, and $AAPL  had their start before they went on to make huge gains and out performed the market.

Let me highlight what I consider to be the foot print that institutions leave behind.  The only indicator to look for in Growth Stocks is  PRICE  and  VOLUME.  You won't know it unless you learn to train your eye for the what the seasoned traders and investors are accustomed to.  It's a skill that one acquires from constantly looking over 100's of stock charts every week.  

1. Dec 2017 ... trading 200,000 shares/day ($20 stock)
2. Jan 2018 ... trading 400,00 shares/day ($25 stock)
3. Mar 29th ... bounces off 50 day simple moving average in volume  + 35%  above average daily volume.  Market is in 'Correction' but the institutions favour this stock instead. 
4. Apr 5th ... Stock breaks out above its ideal buy point of $26.29.  Volume spikes to 2.5 times the average daily volume of 500,000 shares/day. 
5. Apr 11th ... 'Follow Thru'  day.  Retail investor could have bought the stock to test out the market.  Market open price was $26.09 (20 cents below the buy point).
6. Apr 13th ... Institutions come in with volume of stock rising to 2.2 million shares (4 times the daily average volume)
7. Apr 18th ... Stock closes at $29.25.  Stock has risen  +12.11%  within 5 days from the  'Follow Thru'  day.
8. May 2nd ... Stock gaps up with spike in the volume of 1.5 million (2.5 times the daily average volume).
9. May 10th ... 'Follow Thru'  day the stock makes an all time high of 31.63.  Stock has risen  +21.23%  since the last  'Follow Thru'  day on April 11th (4 weeks and 1 day).
10. May 18th ... Stock spiked up past the resistance of $31.63 in volume +50%  above average daily volume (1 million shares).
11. $VNOM  has been trading along the 8 day exponential moving average ever since it bounced off the 50 day simple moving average.  Institutions have not given up on this stock.  There were 10 distribution days since March 29th but this stock has not budged or retraced.  That is a sign of strength in the stock.  These are the kinds of stocks that end up being a  $100  stock trading a million shares or more.

$VNOM is how a typical Growth Stock propels itself from a $4 million volume (Share price $20 x 200,000 shares traded daily) to $31.6 million (Share price $31.63 x 1,000,000 shares traded daily). These are the kinds of foot prints that institutions leave behind.  Learn to identify them and pretty soon you would start to out Perform the market as an active retail investor. 

Mentoring  Program

Our schedule for mentoring new students is filling up fast for the summer months.  There are very limited number of slots available.  Market usually takes a breather during the summer months and its an ideal time to refine your trading skills.  Secure your spot now before those slots fill up.

Schedule a  FREE  30 minutes of  'Discovery Call'  with us and let us help you profit in the market.  Don't continue to lose money in the market and fail to out perform the market.  Let us show you how to look for Growth Stocks and how best to profit from it.

Happy Trading!


Sunday, May 13, 2018

Scaling  in  Stock  Position

We have had 3  "Follow Thru"  days this year.  That is the day that market conditions signals a change to  "Market in Confirmed Uptrend".  It's a signal for investors to start taking initial small positions in stocks to test out the market.  Not all  "Follow Thru"  days will materialize however.  Its critical though not to procrastinate on this day.  Institutions will start deploying their profits into leading stocks and these stocks would start making profits within a very short time.  Once the stock starts making you profits and the market continues to maintain its uptrend, it is time to start adding to your positions.

Following is an example of how  $ABMD  was scaled into during the last 3  "Follow Thru"  days we had this year.  The strategy to follow with Growth Stocks is to  "Buy High and Sell Higher".  It may seem counter intuitive because most of us have been preached  "Buy Low and Sell High".  Actually you make a higher percentage of profits if you abide by the rules that I have highlighted in parenthesis.  Profit is calculated per week with the closing price of $372.68 on Friday May 11th.

Follow Thru Days:

  1. February 14th ... 50% position at $245.00 (+ 4.19% profit per week)
  2. April 11th         ... 30% position at $300.40 (+5.45% profit per week)
  3. May 10th         ... 20% position at $358.72 (+9.73% profit per week)

Market  Performance

We had a lot of Growth Stocks breaking out since Friday May 4th.  The 3 major indexes - $SPY, $QQQ and $DJI have finally broken above the 50 day sma.  Their performance for the week was:

  • $DJI      ... + 2.35% (3 days above the 50 day sma)
  • $SPY    ... + 2.57% (3 days above the 50 day sma)
  • $QQQ   ... + 2.78% (6 days above the 50 day sma)

$QQQ  is still the leading index and Technology Sector is where one should be looking for opportunities.  $XLE (Energy Sector) has broken out since April 11th  "Follow Thru"  day.  It's  + 9.76%  since than.  $CLR  position that I mentioned in my post last week is  +10.87%  in the same time period.  That is what you want to see.  You want the leading stock in the leading sector to outperform the sector etf.  $CLR  did just that. 

Scaling  In  +  New  stock  Positions

The 5 winning stock positions that were mentioned in my blog post last week, were leading the market. They were trading along the 8 day ema (exponential moving average) while the  "Market was Under Pressure".  A follow up position was initiated at market open on May 10th.  2 new small positions were also initiated at market open on  $ADBE  and  $MA.  They had been trending along the 8 day ema for over 12 days while the 3 indexes - $SPY, $QQQ and $DJI were below the 50 day sma.  Institutions were supporting these stocks and these are the kinds of stocks you want to buy on a   "Follow Thru"   day.  Follow along with me on these trades to help you learn about scaling in position.  Here are those stocks and their entry prices identified in parenthesis:

  1. $ABMD   ... $358.72 (3rd position)
  2. $ADBE    ... $240.46 (1st position)
  3. $MA        ... $184.60 (1st position)
  4. $BR        ... $114.73 (2nd position)
  5. $CLR      ... $ 68.46 (2nd position)
  6. $CPRT    ... $ 53.91 (2nd position)
  7. $RHT      ... $172.00 (2nd position)

Mentoring  Program

Would you like to learn:

  •  How I  Out Perform the Market?
  •  What  Stocks  to buy  and  when?
  •  How to  Time the market?

Make a commitment to take control of your portfolio and learn from me.  Listening to the professional money managers and financial advisors is the very wrong thing to do.  You have the unbiased data from the Barrons magazine of the lack of performance of the professional hedge funds.  The top 100 hedge funds underperformed the general market in 2017  - as measured by the performance of  $SPY   by  - 4.04%. 

Schedule a  FREE  30 minutes of  "Discovery Call"   with us and start your investment journey with me as your mentor and a coach.  Don't procrastinate and pass up the opportunity of making a difference in your portfolio.  Start out with a resolution to invest in your education.

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Happy Trading!



Thursday, May 10, 2018

Timing  the  Market

We have had market rally since Friday May 4th.  $QQQ  which is the leading index, popped up above the 50 day sma(simple moving average.  $SPY  and  $DJI  followed suit in the last 2 days.  $RUT (small cap index)  has gained just shy of  +5%  since last Thursday and it too is trading above the 50 day sma.  Lots of leading stocks have been breaking out this week as well.  Market is in a   "Confirmed Uptrend"  according to IBD (Investors Business Daily) and we have a  "Follow Thru"  day.  This is a confirmation sign to the retail investors to start taking initial small positions on stocks.  This is also the time to start adding to your existing position if the stock has maintained its momentum and has held up above the 20 day sma.  

I had written a post on Wednesday Feb 14th  "Follow Thru"   day and had identified a trade on  $ABMD  at that time.   Currently  $ABMD  is  +51%   in 12 weeks (+221% annualized).  This is one reason why it is absolutely critical that retail investors be ready for a   "Follow Thru"   day and be prepared to start initiating small position in leading stocks to test out the water.  Stocks make rapid gains within a very short time soon after the  "Follow Thru"  day.  

I am reposting the content of the post from Wednesday Feb 14th below.  It's very appropriate to review it at this time and be ready to plunge back in the market.   

Follow  Thru  Day (Posted on Feb 14th)

This is how you  "TIME"  the market.  We have had 4 days of rally in the market as of the close today.  We have a  'Follow Thru'  day in the market now.  This is a signal for investors to start deploying their  CASH  and making new stock purchases.  Mr. William J. O'Neil (founder of the Investors Business Daily) has said:

"You should always buy something during the  Follow Thru  day".  

This is the time to start testing the waters and get back in the market.  It's best to start out with a smaller position and scale into in with later buys as the stock that you purchased starts making you profits.  You want to average up during this time.  Most Growth Stocks break out and make their run soon after on a follow thru day.  This is when most retail investors are afraid to trade and invest in stocks when they see their portfolio plummet over 10%  in the last 2 weeks.  Indexes have already gained back  +5%  in the last 4 trading days.   $QQQ  is the leading index right now and it is just less than  5%  below its all time high achieved on January 26th.  It is also the only major index of the 3 ($SPY, $DJI, $QQQ)  that has closed above the 21 day ema(exponential moving average).  That's a very healthy sign that the technology names are outperforming now.  This is the ideal time to get back in the market.  

Trade  of  the  Day (Posted on Feb 14th)  

I had cautioned my readers and followers to have a ready stock watch list prepared just in case we have a follow thru day.  These days come real quick and unless you are engaged with the market on a daily basis with your routine, you could miss an opportunity to get into the stock at its ideal buy point.  Stocks move up rapidly within days and you may never get a chance to catch these stocks again.

$ABMD  is a stock that may present such an opportunity at this time.  I would recommend that you do a Virtual Trade (a trade without actually deploying money and placing this trade on a virtual account most brokers offer on their platform) on it to help you develop and sharpen your skills of trading and investing.

Ideal buy point would be at the resistance line plus 10 cents which is $255.52.
It broke out in volume that was 3 times the daily average volume.
Early buy point could be exercised at $245 to give you a more breathing room, should the market falter.

Buy:  $245 to 255.52
Loss Exit: 232.70 to 242.74
Profit Exit: 269.50 to 281.07 (10% initial exit from your buy point)

Earnings was reported on Feb 1st and the stock gained +7.66% and began to consolidate for the next 8 days.  Next earnings is scheduled to be reported 1st week of May.  You have next 8 weeks available to be in the trade to make your initial profit target. 

Happy Trading!



Do not take a position unless you are prepared to sustain a TOTAL LOSS. Your loss could include the money you invested as well as commissions and transaction charges.

The Information I provide is for education and informational purposes only. The Information provided is not intended to be and does not constitute financial advice, investment advice, trading advice or any other advice. The Information provided is general in nature and is not specific to you or anyone else.