Lessons Learnt From 2016

2016 was a very profitable year for me but there were a lot of challenges along the way.   Market had topped out in May of 2015 and it trended sideways for a year until July 1st 2016. There were minor rallies along the way but they fizzled out within a few days or weeks.   It was very hard to make a   +20%   gains in Growth Stocks and one had to lower the expectations to   +6%   to   +8%   profits in trading such stocks.   It was a very frustrating time for a lot of traders and investors who spent the time building a    Stock Watch List    every week and not be able to execute a very profitable trade on those stocks.   I had to constantly remind myself    "Don't argue the tape"    In the process, I learnt some very valuable lessons to help me become a more profitable trader/investor in 2017.   I would like to share just two very important lessons with you in my post today to help you become a better and a profitable investor in the coming year. 

1.   Don't follow the self proclaimed   'GURUS'   of the market.   I am a disciple of Mr. William O'Neil - founder of IBD (Investor's Business Daily)   I follow his principles of   CANSLIM   methodology to trade Growth Stocks and Options on those stocks.   I also follow Mr. Jesse Livermoore's methodology of   Risk Management.   Both of these mentors of mine located their trading offices far away from the    Wall Street.   They did this so that they can be far away from the   noise   of the market.   I am an  Indian   but my only   GURU   is the   'Stock Charts'  with the   'Price and Volume'   information on it.   I do watch CNBC, FOX and Bloomberg financial channels but it is always on  mute.   I prefer to look at the facts on the stock charts over the weekend when the market is closed.   It says everything I need to know to help me make my decisions without any market noise. 

2.   Always buy something from your watch list on follow thru days.   We had several   'Follow Thru'    days in 2016 when IBD called    'Market in Confirmed Uptrend'.   That is a proprietary signal of IBD which indicates that conditions in the market are favourable in executing a bullish stock position or options on stocks.   The odds are in your  favour that the stock will perform bullishly at this time.   Most of the gains in the market in 2016 were made during three     'Follow Thru'    days sequence of   Feb 16th  ($SPY was +10.71% in 8 weeks),  July 1st  ($SPY was  +4.59% in 6 weeks after Brexit vote) and  Nov 9th  ($SPY was  +5.26% in 5 weeks after US elections)   Most of the 2016 gains of  +11.45%  in  $SPY   came during these   3 'Follow Thru" days.   

My Market Outlook

I have a very bullish bias outlook towards the market right now.   When I look at the monthly charts of the 3 major indexes   ($SPY, $QQQ and $DJX )   that I follow,  I notice that the   20/30/50 dma (daily moving average)   are all running parallel to each other since October of 2011.   Market has maintained its bullish run with counter trend running all along to digest the gains.   For the   last 4 weeks,   all these three indexes are trading tightly and just waiting for an earnings catalyst to propel them higher.   We are heading into the   4th quarter earnings report   in the coming week with   $JPM, $WFC  and   $BAC   reporting later in the week.   Most of the major banks are consolidating their gains and trading in a tight pattern for the last 4 weeks.   Institutions will decide as to how favourable they consider these earnings report.   We as retail traders need to take a clue from them and deploy our harvested profits into the financial sector, if they break out in high volume.

Mentoring Service

Learn to make your year 2017 just as profitable as mine was in 2016.   Enroll in our  Mentoring Service  and learn our system of  Identifying Growth Stocks  such as  $NVDA   which had   +223%    gain in 2016. 

Follow us on tweeter  @spotlightamin   where I tweet about stocks to be on the look out for and some of my trading ideas for you to learn from.


Happy Trading!

Amin