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!

Amin