Investor Spotlight

Market Conditions

We had a 'Follow Thru' day just 6 sessions ago on valentines day. Market had rallied for 4 days after the 3 indexes - $DJI, $QQQ and $SPY - had sliced through the 50 day sma (simple moving average) as well as the 100 day sma. That was down right ugly and we were looking at the possibilty of the market correcting all the way to the 200 day sma. I had called "Market in Correction" 4 days earlier than the standards of IBD (Investors Business Daily) that I generally abide by. In hind sight, its a good thing that I did because it enabled me to initiate defensive selling and reduce my exposure in the market by raising CASH.

Here are the results of the 3 major indexes performance over the last 2 weeks when the market began its rally:

$DJI ... +4.63%
$SPY ... +5.05%
$QQQ ... +7.73%

Market paused after the 4th day of the rally and began consolidating for the last 6 sessions. It was concerning that these indexes were hugging the 50 day sma and it seemed that the 'Follow Thru' day would fail. We had a good performance on Friday that helped the 3 indexes close above the 50 day sma. That's what we would like to see for a continuation of a 'Follow Thru' day.

Building A Stock Watch List

Process of building a stock watch list is something that ought to be done as a weekly routine. They have to be fine tuned everyday and monitored for ideal entry conditions. Lot of stocks broke out during the 4 days of market rally and soon after the 'Follow Thru' day. This is one reason why a retail investor should take several stock positions from their list of the Stock Watch List and enter the market with a small position. This is how you test the market and get the confirmation of which stocks on your watch list are leaders and which ones are laggards. Leaders will immediately start showing strength because you will see shares trading above the average daily volume with increasing prices. This is the most obvious foot prints that the institution leave behind when they commit their $$$ to the stock.

Most leading stocks have already passed their ideal buy area and are now extended. One of the criteria that I utilize for building a strong watch list now would be:

Identify stocks that did not go all the way down to the 50 day sma on a brutal distribution day we had on Friday Feb 5th. This is a sign that the institutions are not bailing out of these stocks while the market was correcting. These stocks may be extended and are building a new base now since the 3 indexes have been consolidating the gains for the last 6 sessions.
Look for RS ratings rising and RS line pointing up and rising faster that the rise in the price of the stock.

Here are 14 stocks that you might want to monitor:

$NFLX
$NOW
$AMZN
$ABBV
$ADBE
$WB
$IBKR
$LPLA
$TSS
$PANW
$EBAY
$ATHM
$MSFT
$BOFI

Mentoring Program

Were you stunned when the market corrected over - 10% over 2 weeks ago? It took 3 weeks in January to make an unprecedented gains only to give it all back and some within 6 days. Do you know what preventive actions you should have taken 3 weeks ago to mitigate losses to your portfolio? If you are feeling sick to your stomach with the train wreck we had faced, than you need to make a commitment NOW to learn:

How to TIME the Market?
How to find the Winning Growth Stocks?
How to Buy the Stocks Right?
How to Plan your Trade for Profit, Loss and Time in the trade?
How to Sell your Stock Right?

I shall be opening up a very limited number of slots for mentoring in March. Schedule a FREE 30 minutes of "Discovery Call" with us and see how best we can help you become a consistent and a profitable trader and an investor in 2018. Don't procrastinate and pass up the opportunity of making a difference in your portfolio. Start out the new year with a resolution to invest in your education.