Sky  Hasn't  Fallen

Last week I was getting a lot of comments and messages from my followers looking for direction with their stocks and portfolio.  $SPY was heading towards the 400 day sma - something that hasn't happened since June of 2016.  It felt like we were going to see the repeat performance of the market crash of the dot com bubble of the year 2000 when the $SPY lost  51%  or what transpired during the 2008 financial crisis when the $SPY lost  58%.  There has been a lot of panic selling in the last 2 weeks as if the  "Sky Was Falling".  I repeatedly looked outside my window and all I saw was beautiful blue clear skies, gorgeous sunshine and cool crisp air with perfect calmness.  It than dawned on me.  It was I who was calm and clear thinking and at ease.  I had already started migrating to  CASH  a day before the IBD(Investors Business Daily) called  'Market in Correction'

It's been brutal to see all the 3 major indexes - $DJI, $SPY and $QQQ free falling and breaking down the last line of defense at the 200 day sma(simple moving average).  Institutions normally look at the 50 day sma as their initial level of support but they abandoned that line 3 weeks ago.  There was very little reason for the retail investors to remain in the market and defensive action of preserving the capital had to be the priority.  This has been my consistent message for the past several years with all my blog posts and tweets.  IBD changed the market pulse to  'Market in Correction'  on Wednesday Oct 10th.  Retail investors should have started migrating to  CASH  with appropriate trailing stops at least 5 days earlier to preserve the capital.

FEAR

"The Oldest and strongest emotion of mankind is fear, and the oldest and strongest kind of fear is the fear of the unknown"

By H.P. Lovecraft (writer)

Its best not to listen to any  'GURUS'  in the media and instead look at the data to arrive at any decision you make in the market.  We all know of the October 1987 market crash when the market dropped  22%  in one day.  Inspite of that fatal day in the market, looking over the data I find that we were in a 16 year bullish trend from  1984  to  2000.  $SPY had gained almost  +900%  in that time frame.  There was a lot of volatility and market correction along the way.  As a retail investor, its best to get out of the market gradually when the market accumulates a lot of distribution days.  Trading the stock market, one has to mitigate risk.  One can always get back in the market when the conditions improve.

We have gone through a  10%  correction twice this year.  One was in late January/early February and the second one was in mid March/early April.  Currently, We have gone through a  9%  correction with the  $SPY  in the month of October so far.  The only major difference this time around is that the  $SPY is at the 400 day sma.  The last time this happened was in June of 2016.  Lot of institutional selling currently is fear based because of recency bias of the memories of the year 2000 and 2008 market crashes.  Selling has been furious this time around and it took a shorter time frame for the  $SPY  to plummet down to the 400 day sma.  Looking over the data we find that the  $SPY skyrocketed  9%  within 2 weeks from the June 2016 lows.  We ought to be open to the possibility of a very similar move when the market begins to rally.  

Do You Have Your Stock Watch List Ready ?   

Performance  of  My  15  Stocks 

Currently I am taking the data of the market day by day as we head into a new week and the last 3 days of October.  We need for the institutional selling to cease and have them redeploy their harvested profits back into the Growth Stocks.  There has been a lot of technical damage done to the stocks across all sectors right now.  When the market goes back into a rally mode and we get a 'Confirmed Uptrend',  it's quite possible that we may have a new leadership of stocks emerging.  This is the week when every retail trader ought to be scouring stocks that have withstood this carnage and exhibiting leadership qualities.  I had published a list of 15 stocks in my blog post on October 14th.  These were the stocks that were trading above the 20 day sma at that time.  They are all above the 100 day sma currently and most of them are above the 50 day sma while the  $SPY  is at the 400 day sma.  This is an indication of institutional support for these stocks during this correction.  

When market goes into correction, you can expect  75%  of the stocks  to follow the general down trend. Its always a good idea to check the performance of the Growth Stocks on your watch list against the leading Growth Stock index $QQQ.  Here are the comparison results since Oct 14th when I published this list:

$QQQ            ... - 4.40%

My 15 Stocks ... -3%

My stocks outperformed the general market as well as the leading Growth Stock Index  $QQQ.  While the general market as exhibited by  $SPY  is at the dangerous 400 day sma, my stocks are holding up well above the 100 day sma (some are closer to the 50 day sma) with this carnage in the market.  These are the kinds of stocks one ought to have on their watch list at this time.

Mentoring  Service

It took us 9 months to attain a gain of  +19.52%  in the leading Growth Stock index $QQQ.  In the last 3 weeks, 10.5% of that gain was just given back to the market.  That's something no retail investors should ever have to give up.  Learn to identify:

• Right type of Growth Stocks in current environment.
• Timing the right time to enter the market.  
• Developing a Trade Plan for every stock position.
• Having appropriate trailing stops to mitigate risk.

Schedule a 30 minutes of  FREE  "Discovery Call"  with us.  I will try to get you on board if you are committed to learning our system to Out Perform the Market.  The next 3 quarters historically - mid term presidential cycle year - tends to be some of the best quarters going back to year 1950.  Don't procrastinate and miss out on an opportunity to learn from me.

Happy Trading!

Amin