$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.
Some of the basic rules to observe to be successful and profitable trading Growth Stocks are:
- Buy Leading Stocks in the Leading Sector.
- Buy High and Sell Higher.
- Concentrate your portfolio into the leading stock that continues to attain higher highs.
- Scale in to position once the stock continues to make gains and trending along the 10 day sma (simple moving average)
- 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.
- 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:
- $20.85 position on 9/30 is +52.52% (4 weeks)
- $21.20 position on 10/2 is +50% (4 weeks)
- $26.96 position on 10/29 is +17.95% (1 day)
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
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