Investor Spotlight

Follow Thru Day

"First, do not be invested in the market all the time.

There are many times when I have been completely in cash, especially when I was unsure of the direction of the market and waiting for a confirmation of the next move.

Second, it is the change in the major trend that hurts most speculators."

Jesse Livermore (World's greatest stock trader of our times)

Investors Business Daily declared a "Follow Thru" day on Thursday April 2nd after the market close. That is the market timing signal growth stock investors use to initiate a small testing position in the leading stocks. We had reached a market bottom on March 23rd with the $SPY (general market performance index) and March 16th with the $QQQ (growth stock performance index). These indexes started making an attempted rally for the last 2 weeks and did not undercut the lows attained in late March.

Did you initiate a stock position last Friday?

This recent "Follow Thru" day has a lot of flaws. They are:

Both the indexes, $SPY as well as the $QQQ are submerged below the 200 day sma(simple moving average). They are prone to failure.
$QQQ is 8% below the 200 sma while the $SPY is 15% below the 200 sma. That is a lot of overhead resistance for these indexes to overcome.
Trading volume during the attempted rally by these 2 indexes was less than the trading volume of panic selling that occurred in the last 6 weeks. That does not indicate to me that the institutions are ready to support the market right now.
50 day sma still has a pronounced downward slope heading to the 200 day sma. It's preferable to have that slope flatten out. We need some more time for the market to consolidate.
Technical damage done to the 2 indexes mentioned has been very severe. It took 16 weeks for the $SPY to attain a gain of +14% and $QQQ +24% from mid Oct 2019 to mid Feb 2020. All that was wiped out within just 5 trading sessions in late Feb.

One of the positive things that I noticed with the two indexes is that the faster moving 10 day sma has turned up and attempting to crossover the slower moving 20 day sma. I would like a confirmation from the institutional investors to start coming in with a buying spree this coming week.

Mentoring and Coaching Program

The market carnage we faced in the last 6 weeks was brutal to the retail investors that were not prepared. We had a great bullish run from Feb 2016 to February 2020. All that hard work and profits attained in the last 4 years have been given back. This might be a good time to look over your trading and investing process. Make an honest assessment of your methodology and seek help if you are getting frustrated with your performance. Here are the real facts and data:

$QQQ - the leading Growth Stock Index doubled from Feb 2016 to Feb 2020

You should be asking yourself that very question. A passive investor would have doubled their portfolio by just investing in $QQQ and not deal with sleepless nights. The reason why a retail investor and a trader manages their portfolio and invests time in the market is because one wants to do better than the average performance of the indexes.

We will be embarking on the greatest financial opportunities of our lifetime once the market settles. Right now what we are witnessing is the wobbly legs with the market. When you have an open heart by pass surgery, you will need time to recuperate before you can start running. This market will take time to consolidate and regain its footing.

I shall be opening up very limited spots for the month of May and June for individualized mentoring. This may be the last time I shall conduct such training. This second quarter would be a perfect time to get educated with my process of:

Identifying WHAT stocks to buy.
Identifying WHEN to buy the stocks.
Learning HOW much to buy initially.
Learning to SCALE in and out of the stocks.
Developing a TRADE PLAN for every stock position.