Timing  the  Market 

We had the market making another attempt to rally to day as a follow thru action from Friday.  Once again the biggest negative was the volume.  We need the institutions to give us a signal with their high purchasing power.  They account for over 70% of the the daily trading volume in the market.  This is a critical time for retail investors and traders to monitor their stock list.  I published a list of 40 stocks in my blog post yesterday that were showing signs of institutional support.  25 of those stocks out performed the  $QQQ  today.  This brings out the conviction that I have a list of successful leading stocks that institutions are investing in.  Increased volume from today with the indexes $SPY  and  $QQQ  rising convincingly later this week would produce a  "Follow Thru"  day.  That is the timing signal that we look for to start initiating small starter positions in the leading stocks.

Here is a partial of the post that was published on May 3rd, describing the importance of acting decisively on a  "Follow Thru"  day.  The last successful  "Follow Thru"  day of April 2nd allowed the  $QQQ  to attain over +60%  within 21 weeks.  Be prepared to take advantage of such timing signal.

Passive   Investing   With   $QQQ

(Partial repost of the blog post of May 3rd)

"Write down exactly how you want to see your world, and visualize it. You have power in your thoughts. "

Bob Proctor (Expert in Law of Attraction)

"Freedom to be your best means nothing unless you're willing to do your best".

Colin Powell (Secretary of State)

We are experiencing a very successful  "Follow Thru"  day  that we had with the  $SPY  on April 2nd, followed by another one with the  $NASDAQ  on April 6th.  March was a horrible month.  We were bombarded with the news in the media about the pandemic.  If you paid attention to the news, you would have thought that the world was coming to an end.  Those that distanced themselves from interacting on social media with every post on the pandemic, were most likely alert when the market took a hold within 10 days of reaching an all time low on March 23rd.  We were all under lock down at that time and afraid to step out the door.  Market in the mean time was flashing an opportunity for the retail traders to start stepping in gradually in the market.

Did you miss this opportunity ?

Fast forward 10 days from the low of March 23rd and suddenly we had a successful rally attempt by the 2 indexes - $SPY  and $NASDAQ.  Lot of retail investors were caught off guard and couldn't believe that the market was taking off again.  Leading growth stock index  $QQQ  had fallen off almost  -35% (1% on an average every day for 35 days).  This was a fast and furious waterfall decline of these 2 indexes.  Lot of investors doubted the  "Follow Thru"  day  - including myself.  Mr. William O'Neil (Founder of Investors Business Daily) has a rule which says:

You must buy something on a Follow Thru day  

When in doubt, it would be a good idea to perhaps start out with a passive investment style of investing in  $QQQ  on  "Follow Thru"  day.  It's a simple strategy as explained below:

• Invest in  $QQQ  at market open the very next day that IBD (Investor's Business Daily) declares a  "Follow Thru"  day.
• Reduce it to 1/2 position when IBD declares  'Market Under Pressure'
• Close out the entire position when IBD declares  'Market in Correction'

 This strategy is explained in details on page  A14  of the current May 4th  edition of IBD print and digital newspaper. 

If You had followed this strategy, the performance results to date from the  April 3rd are:

1. $SPY    ... +12.77% (General Market Performance)
2. $QQQ   ... +12.99% (Growth Stock Index Performance)
3. $XLK    ... +13.98% (Leading Sector Performance)

Happy Trading!

AMIN

  

 Don't  Be  Bearish  Now

Labour day weekend got off to a bad start after the market attained its peak on Wednesday Sept 2nd.  Within 3 trading sessions, $QQQ (proxy for Growth Stocks) dropped precipitously from the 5 day simple moving average (sma) down to the 50 day sma.  That was a -10% drop.

Ouch !  Ouch!  Ouch! 

I know a lot of retail traders and investors were just blind sided and no one expected for the market to drop so fast and furious.  Rate of drop was twice as fast as the one we experienced after attaining all time high on Feb 19th.  $QQQ    went on to correct almost  -35% within 5 weeks.  Market began to rally soon after March 23rd lows and we attained a gain of +63.34% in the next 21 weeks.  That's a phenomenal performance for $QQQ.  

Currently  "Market is in Correction"  as of Wednesday Sept 23rd according to IBD (Investors Business Daily).  Surprisingly, market has attempted to rally in the last 2 days but volume has been lack luster.  Institutions have to come in and lift $SPY as well as $QQQ in volume that is above average daily trading volume.  We have history on our side.  October through April traditionally are the best months in the market.  During the second term Presidential election period, incumbents tend to do what ever they can to stimulate the economy.  Central banks have sent a very clear message to the politicians that interest rates are going to remain low for the next 2 years or more.  Instead of being consumed with the media on the news of the virus or politics of the elections, it's best to use the time wisely and instead develop a stock watch list.  This may be the most critical week in case the market attempts to rally and we get a  "Follow Thru"  day established.

No one can predict what the stocks or the market will do next week.  It's prudent to plan for all possible scenarios and not have an opinion on what the market will do on any given day.

"If  THIS  happens than I do  THAT"

"If  THAT happens than I do THIS"

It's what profitable traders and investors do when they develope a TRADE PLAN for every stock they buy or sell - either for profit or for a small loss.

Stock  Watch  List

I have thrown a wide net  to identify stocks that are:

• Held up closer to the 21 day sma and away from the 50 day sma.
• Trading tightly and orderly with very little give back since Sept 2nd.
• Stocks that are supported by the institutions and show signs of accumulation.

I have indicated in parenthesis areas of support or resistance.  Those numbers will change daily as the market makes progress.  These numbers are just a guide post for me and its not to be construed as recommended areas of buy points.

1. $AAPS  (27.92)
2. $AVGO (362.07)
3. $BBY   (108.44)
4. $BIG    (49.10)
5. $CPRT (104.28)
6. $DG     (201.28)
7. $DHI    (71.83)
8. $DKS   (54.85)
9. $DOCU (217)
10. $FDX    (233.67)
11. $FIVE   (115.17)
12. $FVRR  (123.61)
13. $GSX   (92.0)
14. $HIBB  (36.96)
15. $HZNP (74.97
16. $LEN   (76.69)
17. $LOGI  (71.79)
18. $MTH  (99.24)
19. $NVDA (512.35)
20. $NKE   (113.75) 
21. $NIO    (18.56)
22. $NTRA  (65.66)
23. $PTON (84.63)
24. $RH     (328.74)
25. $ROKU (166.18)
26. $SHAK  (67.81)
27. $SNAP  (23.96)
28. $SQ      (151.98)
29. $STNE  (52.21) 
30. $TGT     (154.69)
31. $TTD    (471.12)
32. $TTGT  (40.26)
33. $TWTR  (40.80)
34. $VEEV  (270.98)
35. $W        (61.60)
36. $WMT   (134.13)
37. $YNDX  (61.40)
38. $ZG      (92.65)
39. $ZM     (478)
40. $ZS     (137.03)

Happy Trading !

AMIN

The Most Beautiful Spanish Chillout - Spanish Nights Market is going thru a correction period n a great time to raise CASH and build a stock watch list of new Growth Stock Leaders. Enjoying this music Sunday afternoon preparing my portfolio from further damage. New bases will form and give us all another opportunity to take advantage of the Nov/Dec/Jan (the most profitable months of the year historically)

New Money: The Greatest Wealth Creation Event in History (2019) - Full D...

 

Principles  of  SCALIN (pyramiding)  in  Leading  Stock

(originally published on June 28th)

"When they came on the scene, Kmart was one of them, when in 1962 it only averaged about 2,000 shares traded each day. Jack Eckerd was another, which in April 1967 also averaged just 2,000 shares of trading each day. Both of these stocks went on to become huge winners. Even though the institutions at first would not pick up Pic'N Save, O'Neil did for his own personal account. He actually kept purchasing this stock on the way up, buying more shares every one or two points when the stock would rise. He did this for several years. In fact, he made 285 different buys on this stock in a span of 7 n 1/2 years. This is probably one of the most masterful examples ever of how to pyramid a winning position. At one point he actually owned 4.99% of the total stock outstanding (if you own more than 5%, you must register with the SEC). This stock would turn out to be one of his biggest winners ever, with some of his initial positions up 20 fold when he finally sold out and his profits were a main source for starting the newspaper Investors's Business Daily a few years later".

Mr. John Boik, the author of his book:

"How Legendary Traders made Millions"

tweeted this passage from page 148 of his book a week ago.  I shared this excellent content on my tweeter account for the benefit of retail traders and investors.  I would highly recommend that you pick up a copy of this book for your library.  He highlights some of the principles that some of the greatest and most profitable traders utilize to accumulate a 7 figure portfolio.

$AMZN   Scaling   In

$AMZN stock is an ideal one to study if you are a student and a follower of IBD(Investor's Business Daily)  CANSLIM methodolgy.    

• Don't buy  CHEAP  stocks.
• Buy  HIGH  and  Sell  HIGHER.
• CONCENTRATE  your portfolio to a few stocks.
• Always buy several  LEADING STOCKS  in  LEADING INDUSTRY  group on a  "FOLLOW THRU"  day.
• SCALE IN (Pyramiding)  when the stock begins to quickly advance to  +5%  from your initial purchase.
• Have a  PLAN  in place to  SCALE OUT  to mitigate the risk of earnings nasty surprise.
• Follow the rules of exiting a position when losses mount to  -7%  to  -8%  from your initial purchase.
• HARVEST  profits when the stock gains  +20%  to  +25%.

$AMZN  became a $1,000 stock on Oct 27th 2017.  16 million shares (4.5 times the daily average trading volume) traded that day.  This was a very clear signal that institutions were on their way to accumulating this stock.  This year on Jan 31st (just 2 years n 3 months after becoming a $1,000 stock), it became a 2,000 stock.  Once again it traded 16 million shares (4 times the daily average trading volume) that day.  Following is classic way one would scale in with the winning stock such as  $AMZN.  

1. Friday April 3rd, initial small starter test position at  $1911.15 when the  $SPY  had a  "FOLLOW THRU"  day.  Stock had been trading tightly and orderly for 3 weeks.
2. Tuesday April 7th, a second starter test position at  $2017.11  when  $QQQ  had a   "FOLLOW THRU"  day.  Initial purchase was already  +5.5%  within 2 days. 
3. April 13th, within one week of trading, stock is  +10.91%  on average of the 2 positions initiated.  Faster moving 10 day simple moving average (sma) and the 21 day exponential moving average is surging up and away from the slower moving 50 day sma.  $QQQ  is still below the 50 day sma.  Stock is clearly the out performer of the growth index.
4. April 24th, scale in at  $2185.95.  Stock cleared the  $2150 resistance just the day before.
5. April 29th, just a day before earnings report is due, harvested the profits from 2 original starter positions for average gains of  +18.72%.
6. May 1st, renter at  $2336.80.  Earnings reported the day before bounced the stock up  +4.5%.  There was some profit taking the day after earnings were reported with a surge in selling volume.  The stock barely budged 90 points.
7. May 5th, scaled in at  $2340.  Technically the faster moving 10 day sma as well as the 21 day ema are smoothing out and running parallel to each other and rising slowly and methodically.
8. May 19th, stock has been consolidating for the last 5 weeks.  Institutions are fully supporting the stock at  2400  level.  Institutions tend to look at the round numbers from which to propel higher.  Scale in at  $2429.83.
9. May 27th, the stock bounces off the 21 day ema.  Slower moving 50 day sma is catching up to the rising 10 day sma and 21 day ema.
10. May 28th, scale in at  $2384.33.
11. Stock is hovering tightly around the  2500  mark for the last 2.5 weeks.  Initial trailing stop for the stock is monitored around the  2300  level which is closer to the  34 day ema.
12. June 15th thru June 19th week, the stock is trading tightly like it hasn't done in the last 4 months.
13. June 22nd, scaled in once again at  $2684.50.  
14. June 26th (last Friday) we had a major reversal and a  "distribution day"  on both the  $SPY  as well as  $QQQ.  Stock barely budged 18 points.  It is held up at the 10 day sma while the leading growth stock index  $QQQ  plummeted down to the 21 day ema (that's really not bad for the index that is  +12.79%  year to date.  $AMZN  on the other hand is  +45.55%  year to date.  It clearly is out performing the market.

Update

Added position:

1. July 1st at $2757.99
2. July 2nd at $2912.01

Currently the average for 8 positions is $2543.17.  It's +22% as of Friday Sept 11 close.  On April 29th, +18.72% profits were harvested prior to earnings report.  Market is under pressure right now and it's time to be defensive.  One must never give up the profits of  +20%  to  +25%  made in a stock.  $QQQ  the leading Growth Index has dropped  -10.92%  since the market top it reached on Sept 2nd.  $AMZN  on the other hand has dropped  -11.75% and it's now trading below the 50 day simple moving average.  Institutions usually support the stock at 50 day sma.  It needs to consolidate and hold at 3250 to give me confirmation that institutions are going to support this stock.  Starting Monday morning Sept 14th, it will be prudent to protect the profits made since  April 29th by scaling down.  The last time when market dived after Feb 19th all time highs, $AMZN   dived  -25%.  

Good luck trading this coming week.

Build your watch list and start raising CASH now.

It may take several weeks for the market to get it's footing.

Take a breather now and polish your trading skills instead.

Learn from the mistakes we made during market correction from Feb 19th to March 23rd.

Amin

Timing  the  Market

Utilizing a simple tool

Simple    Moving    Average    Lines

"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 Willian J O'Neil (Founder of Investors Business Daily)

Simple moving average (sma) lines are very simple tools to use for taking a position in a stock but also to exit a position for profit as well as exiting the position to mitigate loss.  Institutions account for more than 70% of the trading volume in the stock market.  Ultimately it is them that determine what the stock price is going to be.  If they  decide to enter a stock position, it may take them several weeks to accumulate the entire position.  Stocks will show that by having the price of the stock staying close to the faster moving 10 day and 21 day sma.  Conversely, if they decide to exit the position, it will show up as high volume of stock trading and the price will begin to get depressed lower.  It will show up as the  faster 10 day and the 20 day sma heading lower towards the  slower moving 50 day sma.


Last Thursday and Friday, market took a turn for the worse.  I fielded a lot of calls from my readers wondering what to make of it.  It was their carnal instincts of FEAR, GREED, PRIDE and HOPE being displayed.  Suddenly their profits in $TSLA, $NIO, $AAPL, $NVDA, $CRM and other growth stocks were evaporating.  They feared that we may be facing a downturn in the market like we experienced from the Feb 19th all time high to the all time lows achieved on March 23rd.  We all need to use our carnal instincts to our advantage by shifting our attention from our emotions to the data.  It's best to allow data to drive our decisions under such circumstances.


Currently the  $SPY(General Market Performance) and the  $QQQ (Growth Stock Performance) are hovering right around the 21 day sma.  Both these indexes were trading above the 5 day sma for the last 14 sessions.  This was unsustainable and was bound to retrace.  We had a very similar action taking place in February when both these indexes traded above the 5 day sma for 11 days.  Are we going to experience a similar bearish move in the market this time around?

No  one  can  predict  that

50 day moving average line is one of the most closely watched lines by the institutional investors.  Once the stock approaches this line after trading above the 20 day sma, retail investors ought to pay attention to see if the stock gets supported by the institutions at this level.  Institutional buyers will come in with huge volume buying to pick up these shares when they are committed to the stock.  One of the clues to look for during  'distribution days'  is to determine if your stock is being supported or disposed of by the institutions.  If your stock is supported and it bounces off the 50 day sma in volume considerably higher than the average daily trading volume, one might want to consider initiating a new position or adding on a second position in the stock.  Conversely, if your stock has lost 7% from it's entry or the stock is beginning to approach the 50 day sma, consider scaling down and start raising  CASH  instead. 

  Would we have a follow thru action in the coming week from the institutions to support these indexes above the 21 day sma or are we going to experience the sharp drop off with the indexes like the one we had in mid February?  

It's a good idea always to plan for the worst and hope for the best.  Weekend is a good time to look over the stock charts and scrutinize all your positions.  Check the performance of your stocks to see if they are being supported by the institutions.  Get rid of the ones that are dropping off below the 21 day sma in higher volume than an average trading volume.  Compare the performance of your stocks against the  $SPY   and  the  $QQQ.  As a growth stock investor, you want your stock to outperform these 2 indexes.


Happy Trading!

Amin

Tango Azul Labour Day Weekend ... Enjoying the music while I analyze 150 stock charts. Market took a tumble and it's time to be defensive with your stocks. Don't ever allow + 20% to +25% gain in a stock evaporate. Start scaling down and raise some CASH now.