Investor Spotlight

Timing the Market

Here is the quotation from Richard Driehaus (Market Wizards)

"Penalty for being Out of the Market on the wrong days is severe and human nature being what it is, those are exactly the days that most people are likely to be out of the market"

We had a "Follow Thru" day established after the market close on Tuesday April 10th. According to Mr. William J. O'Neil (Founder of Investors Business Daily), you must start dipping your toes back in the market during this day. $SPY was trading at the 200 day sma for 10 sessions since March 16th and most retail traders were stunned. It was time to be in CASH to stop the erosion of the capital. Classic mistake that most traders make is not to get back in the market during the "Follow Thru" day. Our emotions gets in the way and we tend to overestimate the bad things happening in the market during correction. We know from history that the best time to get back in the market after a correction is on a "Follow Thru" day. Most of the leading Growth Stocks tend to break out in the first several days. You have to monitor the days that the market rallies and have a well researched Stock Watch List prepared. Did you take some stock positions at the market open on Wednesday April 11th to test out the validity of the market uptrend ?

Results of My Stock Watch List

One must always compare the performance of the stocks on a watch list against the performance of the indexes. I had identified 25 stocks in my blog post on March 25th when the $SPY had dropped down to the 200 day sma(simple day moving average). These were the stocks that were held up during the market correction. They were all trading along the 21 day ema(exponential moving average) while the $SPY (used as a barometer of the market direction) was dropping all the way down to the 200 day sma in a correction territory. These stocks also had an RS ratings above 90. These stocks were supported by the institutions and they would be the ones that would tend to surge when the market goes into a rally mode. Here are the results of these stocks performance for the last 3 weeks as compared to the performance of the 3 major indexes that I usually monitor:

Indexes:

$QQQ ... +1.80%
$SPY ... +2.75%
$DJI ... +3.51%

Watch List 25 Stocks:

+10% (out performed the best performance of the index - $DJI - by 2.85 times)

Stock Positions Exercised On "Follow Thru" Day

Here are the 10 stocks from my watch list, that one should have exercised a small position at market open on Wednesday April 11th, to test the validity of the new bullish trend established on a "Follow Thru" day. Most of these stocks had an RS ratings of 94 and above. 7 of them were from the top 33 groups of the IBD 197 groups. Data from the IBD indicates that following such a strict criteria of selection has the odds of success greatly improved in your favour. 9 of these stocks were exercised at price below the resistance levels (I had identified these prices in my blog post of March 25th) at the market open price. Market open buy points are identified in parenthesis. It allows you a bit of cushion should the market rally fizzle out.

$ABMD ... $300.40
$ADBE ... $222.93
$BZUN ... $ 48.03
$BR ... $107.49
$CASA ... $ 29.54
$CPRT ... $ 50.42
$NOW ... $165.08
$RHT ... $156.00
$SEDG ... $ 54.90
$SGH ... $ 45.03

Mentoring Program

Did you know what stocks you should have purchased on a "Follow Thru" day on Wednesday April 11th?

Do you know how to scan for Growth Stocks that will lead the market when institutional selling ceases and you have a "Follow Thru" day?

If you were stunned with the market correcting for the last 3 weeks, than you need to make a commitment NOW to learn:

How to TIME the Market?
How to find the Winning Growth Stocks?
How to Buy the Stocks Right?
How to Plan your Trade for Profit, Loss and Time in the trade?
How to Sell your Stock Right?

Classes for April are full with just a few slots left. Hurry and secure your spot before they all fill up this week. Schedule a FREE 30 minutes of "Discovery Call" with us and see how best we can help you become a consistent and a profitable trader and an investor in 2018. Don't procrastinate and pass up the opportunity of making a difference to your portfolio. Start out now with a resolution to invest in your education.