Investor Spotlight

Sunday, July 23, 2017

Why I Stay Engaged With The Market

July is traditionally a weak month in the market. Over the last 50 years, market has done just +0.32% on an average for the month of July. If you listened to the media "GURUS" on the financial network TV, they would have said "Sell in May and Go Away". What do they know? I don't consider them to be the experts. In 2016, we had a "Follow Thru" day on July 1st and the $QQQ was + 7% for the month. Media "GURUS" were wrong and they never admitted to that. I was on a 2 weeks transatlantic cruise in June of 2016 but I stayed engaged with the market. It was a very frustrating experience with the internet on the cruise ship. It was unreliable and expensive. At times I got up at 4.00 am just to gain a reliable access to the internet to review the market and to scrutinize the stock charts. I am glad that I stayed engaged with the market. I was able to take positions in the stocks that were on my Watch List and profit from it handsomely as a result.

Market Performance for July

I learnt a very good lesson last year. There was nothing but doom and gloom in the news media last year about Brexit or Grexit and yet the market took off on July 1st for a +7% gain in $QQQ. 2017 year is no different. Mr. Trump is being investigated by Mr. Mueller, North Korean leader keeps firing off missiles towards Japan, OPEC keeps soliciting its members to cut production of oil and Iran is continuing on its quest to attain a nuclear weapon. I consider this to be the noise in the market. It is best to just make your decisions based on the market conditions and what the stock charts reflect. Your decisions in the market has to be driven by the data. Everything else is noise. Here is what the performance of the 3 major indexes and the leading Technology Sector ($XLK) is for the first 3 weeks of July:

$DJI ... +1.08%
$SPY ... +2.10%
$QQQ ... +4.70%
$XLK ... +5.03%

Stocks on My Watch List

Last week I had identified 3 stocks that I was monitoring. Their performance for July is highlighted below. They have acted very well for the past 3 weeks. I have identified their ideal pivot target prices in brackets. According to the IBD (Investors Business Daily) rules, one should only take a position in these stocks if they punch thru the pivot in volume atleast 40% above their normal daily average volume.

$AMAT ... +15.31% ($47.96)
$LRCX ... +15.63% ($167.15)
$NVDA ... +16.28% ($168.60)

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