Investor Spotlight

Market Conditions

Friday we got the confirmation from the institutions that they are committed to the market in a very bullish way. We haven't seen that sort of trading volume since the start of the bullish signal we got in March of 2009 "Folllow Thru" day. The two leading index, $QQQ and $DJI had trading volume that was 2 times the volume from the previous day. I have been saying all along that institutions are the ones responsible for over 75% to 80% of the volume in the US stock market. You just have to follow the foot prints that the institutions leave behind. They spoke very loudly on Friday. I just fail to understand why every trader I came across last week was talking about Bitcoin. What a waste of energies when instead they could be spending that time and efforts to searching for Growth Stock opportunities. I did just that on Saturday morning at 5.00 am. Headed out to Disney Epcot center in the afternoon to celebrate the "Candle Light Processional Show" followed by the spectacular Fireworks. I was going to treat myself and spend some money from the profits I have made this year so far. That is something Mr. Jesse Livermore (the greatest stock trader of our time) did every year after doing a post mortem of all his trades for the year. He stuffed his pockets full of cash from the bank and spent his profits. That is something every investor ought to do.

Market Performance

Currently we have a total of 5 "Distribution Days" between the $NASDAQ and the $SPY. We haven't gone through much of a correction in the market in 2017. We had less than -3% correction during the 4 weeks in late March to mid April and 4 weeks in early June thru early July. We had a slight scare for 4 weeks from July 27th thru August 27 with the leading index $QQQ when it sliced thru the 50 day simple moving average. The index still didn't lose any where close to -3% during that time. Market has managed to quickly recover within days after correcting during these 3 periods that I outlined.

The 3 major indexes that I follow have their year to date performance for the last 50 weeks as follows. My goals that I have set for the year end for these 3 indexes are highlighted in parenthesis. They are the same ones that I projected 2 weeks ago at the start of the month of December. This is not a prediction but probabilities of what typically occurs during the rally the last 2 weeks in December.

$SPY ... +18.43% (270)
$DJI ... +24.23% (25,000)
$QQQ ... +31.81% (160)

Trade of the Week (11/19 Blog Post)

I had 2 trades highlighted for educational purposes. One of them is a winner currently and the other one was a loser. The results are as follows:

$MFGP ... Trade was filled 1 week later on 11/27 according to the Trade Plan outlined on the blog post at $34.15. It was closed out for a loss of -3.40% at $32.99 on 12/1 (1 week in the trade) according to the Trade Plan for Loss Exit.
$RHT ... Trade was filled 2 weeks later on 12/4 according to the Trade Plan outlined on the blog post at $122.43. It is still trading above the 8 day ema (exponential moving average). It's currently showing a profit of +5.19%. This stock position is continuing to show strength and will have to be managed next week with trailing stops to protect the profits in the trade. They have earnings being reported the following week. It will be best to close out the position prior to earnings to avoid the risk of an ugly earnings surprise.

Important lessons to learn from this exercise is:

Have a detailed Trade Plan for Loss Exit, Profit Exit and the Time in the trade Exit.
Mitigate your losses during earnings report by closing out the position prior to earnings report to avoid ugly earnings surprises.
You could be losing 1/2 of all your trades and still be ahead in your portfolio by limiting your losses.
You can Out Perform the Market by following your Trade Plan as outlined in this example. You lost -3.40% in the losing trade but gained +5.19% in the winning trade so far. Average performance with these 2 trades was +1.79% while the leading index $QQQ has performed +0.64% per week this year. You Outperformed the leading index $QQQ by 2.8 times.

Mentoring Program

I would be opening up a few limited spots for the classes in January. Would you like to learn:

How to identify the Leading Stocks in the Leading Sector?
How to look for Signals that institutions leave behind during "Follow Thru Days" when the market just rockets ahead in a very short time for a quick profit in the trades?
How to manage your stocks to "Out Perform the Market?
How to mitigate "RISK" with your stocks during the earnings report?

Schedule a FREE 30 minutes of "Discovery Call" with us and find out how best our individualized mentoring program can make you a profitable investor. 2017 was a banner year and this bull market may extend for another 5 to 7 years. Make 2018 your year to profit so don't procrastinate. Make an investment in your education and learn from one of the best in the business.