$NIO

It is one of the great paradoxes of the stock market that what seems too high usually goes higher and what seems too low usually goes lower.

William O'Neil 

Some of the basic rules to observe to be successful and profitable trading Growth Stocks are:

1. Buy Leading Stocks in the Leading Sector.
2. Buy High and Sell Higher.
3. Concentrate your portfolio into the leading stock that continues to attain higher highs.
4. Scale in to position once the stock continues to make gains and trending along the 10 day sma (simple moving average)
5. Allow the stock some breathing room.  Quite often they will retrace to digest the gains and allow one an opportunity to get into the stock again.
6. Observe the   '8 Week Hold Rule'.  Successful Growth Stocks will often gap up and attain  +20% gains within a week to 3 weeks.

$NIO was a stock trading for less than $4.00 in 2019.  Most institutions don't get involved with stocks that are trading at less than $10.00.  IBD (Investors Business Daily) type of traders and investors usually look for stocks that are trading over $100 million (Share price X total average daily volume of shares traded).  Following is a brief summary of how one could have attained  +52.52%  gains in October.

• 6/3/20 ... Stock broke out from $4.87 resistance level in volume that was 200 million shares.  It quickly rose +20% within days invoking an  '8 Week Hold Rule'.    
• 7/2/20 ...  Stock broke out from  $7.90 resistance level in volume that was  200 million share.  Stock rose +20% within days with increasing volume of 400 million shares changing hands.  Once again it invoked the  '8 Week Hod Rule'.   It's a  $16.00  stock now and an institutional quality stock.  Retail traders should have picked up on the rising stock price and rising volume of shares changing hands daily.
• 8/25/20  ... Stock broke out from  $16.44  and rose  20%  the next day and once again invoking an  '8 Week Hold Rule'.
• Stock has a history of consolidating for 4 weeks before rising again.  This is what institutions usually do to allow the volatility to subside before making their next purchases in the stock.  
• 9/29/20  ... Stock broke out from  $20.25 resistance level in volume that was 2 times the daily average volume (165 million shares).
• 9/30/20   ... Initiated a position at  $20.85.  10 day sma was moving up and away from the 21 day sma.  
• 10/02/20   ... Scaled into another position at $21.20 since the stock had advance  +1.7%.
• 10/14/20   ... Stock breaks out from  $22.59.  Trading volume has surpassed 400 million shares per day for 2 days in a row.  Once again the stock has moved  +20%  within days and invoked an  '8 Week Rule.'   Plan on holding onto the stock till early December. Stock seems to continue in a stair step advance since July 2020.
• 10/27/20   ... Stock breaks out from  $26.96  while the market is correcting.
• 10/28/20   ... Scaled into another position at  $26.96.  Market is correcting but the stock is held up by the institutions and is trending along the 10 day sma.
• 10/29/20   ...  Stock has advanced  +15.66%  within a day now. 

 

As of writing this post at 2.30 pm on 10/29/20, stock is trading at $31.85.   The 3 positions taken since 4 weeks ago, the results are as follows:

1. $20.85 position on 9/30 is  +52.52% (4 weeks)
2. $21.20 position on 10/2 is  +50% (4 weeks)
3. $26.96 position on 10/29 is +17.95% (1 day)

Stock is currently  +50%  above the 50 day sma.  Its trading at the upper range of its channel line.  It's prudent to harvest some profits and lock in some gains since there is a high likelihood of the stock to retrace to  $27 to  $29  level.  I had locked in some gains of  +43.89%  earlier in the day at  $30.  Rest of the position should be held through beginning of Dec since it has invoked an   '8Week Hold Rule'.    

Good Luck Trading.

Be sure to harvest some profits and lock in gains if your Growth Stock has attained profits of  +20%  to  +25%.  Market tune has changed to  "Market under pressure"   as of yesterday.  It's time to raise some  CASH  right now to deploy when the market tune changes back to  "Confirmed Uptrend".

Happy Trading!

Amin

How  Good  is  Your  Stock  Watch  List ?

"We've all heard the saying "timing is everything".  This is just as true in the stock market as it is in life.  Knowing the optimal time to buy or sell a stock is a valuable skill anyone can and should learn"

By William J O'Neil (Founder of Investors Business Daily)

I had published a Stock Watch List of 40 stocks in my post on September 27th.  These were the leading stocks in the leading sectors at that time.  As a retail trader, it's always a good idea to compare the performance of the stocks in your portfolio as well as stocks that one is monitoring against the major indexes of  $SPY  (General Market Performance) as well as  $QQQ  (Growth Stock Performance).  It takes a lot of time and thorough analysis to do that but that's the only way I know how to develop a list of stocks that are true leaders in the market.  It's best to be driven by data instead of our own opinions and biases about the stocks.

Here are the results of the performance of those 40 stocks in the last 4 weeks.  Market has been trending sideways in the last 4 weeks.  In 10 days the uncertainty of presidential elections will be out of the way.  In 2016 November, we had a  "Follow Thru"  day soon after the elections and lots of stocks that were trending sideways just took off and never looked back.  There is no guarantee that it will happen again but one must prepare for such an eventuality.  As a retail trader and an investor, one must prepare to have some  CASH  available right now to be able to take advantage of  such an opportunity.

I have highlighted the stocks that have continued to Out Perform the Market and are building bases to make the next move higher,  once the uncertainty of presidential elections is out of the way.  These stocks are also trending along or above the 21 day ema (exponential moving average).  Stocks that are highlighted in red are the ones that I have removed from my watch list.  They have maxed out and are trading below the 50 day sma (simple moving average).

1. $APPS   ... +14.45%
2. $AVGO   ... +4.74%
3. $BBY    ... +12.16%
4. $BIG    ... +7.09%
5. $CPRT    ...+9.62%
6. $DG   ... +3.38%
7. $DHI   ... +2.05%
8. $DKS   ... +6.60%
9. $DOCU   ... +3.52%
10. $FDX   ... +11.30%
11. $FIVE  ... +6.22%
12. $FVRR   ... +17.80%
13. $GSX   ... -31.90%
14. $HIBB   ... +17.53%
15. $HZNP   ... -0.83%
16. $LEN   ... +1.83%
17. $LOGI   ... +20.35%
18. $MTH    ... -1.76%
19. $NVDA   ... +5.64%
20. $NKE    ... +3.44%
21. $NIO    ... +48.20%
22. $NTRA   ... +3.75%
23. $PTON   ... +25.38%
24. $RH     ... +11.34%
25. $ROKU   ... +22.60%
26. $SHAK   ... +13.03%
27. $SNAP   ... +78.94%
28. $SQ     ... +12.41%
29. $STNE   ... +11.76%
30. $TGT    ... +3.78%
31. $TTD    ... +31.24%
32. $TTGT   ... +11.02%
33. $TWTR   ... +15.74%
34. $VEEV   ... +8.39%
35. $W      ... -9.78%
36. $WMT    ... +4.73%
37. $YNDX   ... -6.38%
38. $ZG      ... -5.14%
39. $ZM     ... +2.97%
40. $ZS     ... +6.35%

Analysis :

6 losing positions average loss -9.30%

34 Winning positions +13.09%

40 stocks on the list average +9.73%

26 stocks highlighted average +15.99%

$SPY performance same period +5.19%

$QQQ performance same period +4.95%

Stocks in my portfolio (performance same period) :

$AMZN ... +3.87% (read my blog post Sept 13th)

$NVDA ... +5.64%

$NIO    ... +48.20% (will post a blog on it)

$PYPL   ... +8.43% (will post a blog on it)

$RH      ... +11.14% (read my blog post Oct 22nd)

Average performance of these 5 stocks is  +15.46%  since Sept 25

Average performance of  $SPY  and  $QQQ  is  +5.07%  since Sept 25 

My 5 stocks have Out Performed the Market by 3.05 times.

26 stocks highlighted above have Out Performed the Market by 3.15 times.

This sort of analysis and evaluation of portfolio is the best way to know if you are in synch with the market.  As a Growth Stock investor and a trader, one must remove the emotions of greed, fear, hope and ego in evaluating the stocks.  Being data driven helps one remove biases that we are all exposed to in the print and television media.

Good luck trading and be sure to exercise your vote on Nov 3rd.  

Happy Trading!

Amin

   

Jesse Cook - "On Walks The Night" (Live)

 Restoration  Hardware ($RH)

Growth Stock investing is one of the best ways to Out Perform the overall market as measured by the performance of the $SPY. 

 It requires one to:

• Invest in the leading stock in the leading sector.
• Buy correctly at its ideal buy point.
• Scale into the stock as the stock continues to attain higher price.
• Concentrate the portfolio by getting rid of the laggards and invest into the leading stock that continues to attain higher highs.
• Mitigate risk by taking partial profits when the stock attains gains of +20 to +25%.
• Reduce the position size prior to earnings to mitigate the risk of a downside reversal in a stock from a nasty surprise during earnings.

$RH was one of the leading stocks in late 2019.  I had highlighted this stock in the summer of 2019 with my published stock watch list in my blog post.  It was also highlighted in details at one of my IBD (Investors Business Daily) Meetup groups in the Tampa Bay area.  Here are the details of the stock to illustrate how one could have successfully handled such a stock to attain profits of +242.77% in the last 72 weeks.  $SPY  on the other hand has gained +19% in the same time frame.

• 6/12/19 Stock gapped up +16% with 9 times the daily average volume during earnings.  This was a confirmation that institutions were accumulating a position in this leading stock.
• 6/14//19 Friday initial position taken at $109.82
• 9/10/19 Mitigate risk by taking the position off at $152.89 (+39.22% gains) a day before the earnings announcement.

• 11/18/19 New position taken at $188.43.
• 11/22/19 Scaled in a new position at 199.52. Stock trading above the 10 day sma (simple moving average) indicating institutional support.
• 12/4/19 Hold the position through the earnings on Thursday and close out the position Monday morning at $240.02 (+25% gains) after earnings volatility subsided on previous on Friday.   

• 4/7/20 We had a  "Follow Thru"  day. Initiated a position at $110.56.
• 6/3/2020 Mitigate risk by taking the position off at $251.56 (+127% gains) a day before the earnings.
• 6/8/20 Reenter a new position on Monday at $250 once the volatility subsided on Friday - the day after the earnings announcement.
• 7/1/20 Scaled in with a new position at $250.29.
• Tried but was unsuccessful in getting entry orders for 270/280/310/315 while the stock was trending along the 10 day sma.  It never retraced to the 21 day sma which would have been ideal entry points technically.
• 8/26/20 Scaled in at $320 a very small position just few days prior to earnings report.  Exited the position on 9/9/20 a day prior to earnings anouncement for a loss of -1.83%, since the market tune had changed to "Market Under Pressure".  
• 9/10/20 Held onto the position of $250/$250.29 through the earnings report (average price for 2 positions is $250.15).  Stock was behaving very well with institutional support.  It had bounced off the 50 day sma on 9/4/2020. 
• 9/10/2020 Stock gapped up +22.79% with earnings announcement.  Trading volume was 7 times the daily average trading volume.  The 2 positions is now +53.97%.   It will take a couple of weeks to digest this high volume before the stock can resume it's upward trend along the 10 day sma.
• 10/5/20 Scaled in a small position at $375.  10 day sma and 21 day sma are now merging and the stock is building a flat base for the last4 weeks.  Have a stop order at $356.25 to mitigate risk since the market is treading sideways with indecision. 
• 10/15 Scaled in a small position at $382.50.  Have a stop loss order at $359.55 to mitigate risk since the market is treading sideways with indecision

All time high attained was on 9/10/20 at $410.49 while the market was  under pressure.  General market performance - utilizing the $SPY  as a proxy - had sliced below the 34 day ema (exponential moving average) and very close to undercutting the 50 day sma.   If the market conditions improve and the stock continues to show a strong institutional support, the next scale up in position would be at the $385 level.

Good luck trading!

Amin