Follow   the   Institutions 

"I cannot do a superior research than these big boys.  But I can see what the big boys do with the research in the way they buy and sell stocks.  I see plainly on the index and individual stock's price and volume action.  That to me is all the information that is needed.  I just follow the big money.  But to get to that point, I spent years learning.  It is only the large gains I have made that has confirmed what all top speculators know.  It is all in the price and volume action.  And the rest of the stuff in the market is pure fluff" 

By Brad Koteshwar

Author of  'The Perfect Speculator'

John Boik @Monsterstocks1 tweeted the above passage earlier in the day on Tuesday March 9th.  You should follow him on tweeter.  He is a disciple like me of Mr William J. O'Neil (Founder of Investors Business Daily).  Quite often he highlights the work of 2 other greatest stock traders of our time - Mr. Jesse Livermore  and  Mr. Nicolas Darvas.

We had a strong follow thru action on Tuesday of  +3.86%  as a day 2 of the attempted rally on the leading growth stock index  $QQQ.  It bounced off the 100 day sma(simple moving average).  Currently the index is just  +3%  away from reaching the 50 day sma.  If we get a similar action tomorrow in greater volume than today, I would consider that to be a  'Follow Thru Day'  for me to test out some starter positions and allocate up to  2% of the capital initially to test them out.  I would also consider adding to some of my large existing positions that have survived the  -10%  correction since Feb 16th all time highs.

Here are some of the growth stocks that were on my short list that performed better than the  $QQQ  today.  It might be worth looking over the weekly charts of these stocks and identify earlier buy points to exercise.  Some of these stocks are extended while others are lying below the 34 day ema (exponential moving average).  You tend to have a higher probability of a successful entry if they are closer to the 34 day ema.  I have indicated the  %  price increase next to the stock symbol.  

Stocks:

1. $QQQ   ... +3.86%
2. $AMAT  ... +8.08%
3. $ARKK  ... +10.66%
4. $ASML  ... +7.38%
5. $ALGN  ... +3.99%
6. $APPS  ... +15.36%
7. $CHGG  ... +5.31%
8. $DBX     ... +4.13%
9. $DT       ... +6.18%
10. $DQ      ... +22.45% 
11. $ENPH ... +12.63%
12. $ENTG  ... +8.03%
13. $ESI      ... +8.32%
14. $ETSY   ... +8.30%
15. $FRHC  ... +6.89% 
16. $FTNT  ... +5.78%
17. $FUTU  ... +24.16%
18. $GBTC  ... +8.19%
19. $GME   ... +26.50%
20. $GNRC  ... +4.86%
21. $HOME  ... +6.88%
22. $HOV   ...  +4.69%
23. $HZO    ...  +5.60%
24. $IAC     ... +6.18%
25. $INMD   ... +6.41%
26. $IPGP   ... +6.09%
27. $KLAC   ... +7.32%
28. $LGND   ... +9.29%
29. $LI         ... +8.20%
30. $LOGI    ... +6.42%
31. $LRCX  ... +8.13%
32. $MPWR  ... +7.22%
33. $MRNA  ... +6.50%
34. $MU       ... +5.0%
35. $MXL     ... +4.79%
36. $NIO     ... +17.36%
37. $NVDA   ... +7.98%
38. $PINS    ... +7.96%
39. $PLL      ... +21.87%
40. $PLT      ... +7.65%
41. $PLTR   ... +7.90%
42. $PTC     ... ++7.32%
43. $PYPL   ... +6.82%
44. $QFIN   ... +20.27%

Do your homework first thing in the morning to identify the best of the best performing stocks.  All one needs is just a couple of stocks to attain gains of  +20%  to  +25%  within days or couple of weeks once IBD (Investors Business Daily) identifies a   'Follow Thru Day'.

U  Snooze  U  Lose

Stay disciplined and keep your standards very high.  Take action on stocks that exhibit an  RS  ratings that are in the 90's if ever possible.  Look for RS  line attaining all time high and pointing decidedly up between 12 and 3 o clock on the clock.  Look for decidedly increased volume above the normal during market rally days.  Next 2 days are pivotal if one wants to succeed as a retail growth stock trader and an investor.  There is no guarantee that the   'Follow thru Day'   would be successful but data suggests that one must take action and initiate a small starter position during such days.  April 2nd and April 6th 2020  'Follow Thru Days'  were suspects but history shows us that one would have doubled their portfolio with  $QQQ  in just 11 months since than.  We were all late coming to the party last year when IBD declared a   'Follow Thru Day'   in April.

Happy Trading!

Amin

Learn to  "TIME"  the Market

IBD (Investors Business Daily) declares a  'Follow Thru Day'  when the market attains a bottom and is attempting to rally.  That is the  TIMING  signal that Growth Stock Investors look for to slowly test out the market once again.  It could take anywhere from the 4th day to the 11th day of attempted rally before we could have a confirmed change in the direction of the market.  Quite often the market could rally strongly and we could face a confirmed uptrend within 3 days sometimes.  Friday we saw a very strong attempted rally with the Growth Stock index  $QQQ.  Volume traded was 3 times the normal average daily trading volume.  That indicated a strong conviction from the institutions in the market.  $QQQ   rallied  +1.50%  while the  $SPY  and  $DJI  both rallied even strongly by  +1.85%.

'Follow Thru' Day'    occur when we least expect it.  I can still remember when our nation was focused on fighting Iraq when Saddam Hussein had annexed Kuwait.  We had almost 1/2 a million troops in the Persian gulf and the media was hyper focused on analysis and the video coverage of the war.  We had the market rally and some of the leading Growth Stocks went on to make huge gains within weeks when IBD (Investors Business Daily) declared a  'Follow Thru'  day.  Retail investors that did their homework and deciphered the stock charts, ended up attaining substantial gains in the market. 

Hopefully you were not paying much attention to the media highlighting inflation, yield curve and sector rotation.  Your time would have been better spent raising  CASH  instead by harvesting profits from the stocks that had attained  +20%  to  +25%  profits.  Hopefully most retail traders learnt a painful lesson once again to scale down stock positions as the  $QQQ  heads down below the 21 day sma.  Last 3 weeks was the time to refine your Stock Watch List and just remain on the sidelines until the market shook out all the weak holders.  There is going to be  $1.9 Trillion stimulus money dispersed into the economy before the end of this month.  March and April are 2 of our most strongest months in the market.  

Could we be in for a very pleasant surprise once again with a powerful rally this week?

Do you have an action plan in place to take advantage of it?

Exactly a year ago when the nation and the rest of the world was getting locked down from Covid virus, we all thought that the world was coming to an end.  We were all scared and stunned while the market was dropping 1% per day for 35 days in a row.  Just as quickly we had a  "Follow Thru Day"  declared on April 2nd with the  $SPY  followed by the  $QQQ  just days later on April 6th.  Like most retail traders, it was even hard for me to engage with the market at that time.  $QQQ  was residing below the 50 day sma(simple moving average) and that was a suspect for me.  To our surprise the market just took off and never looked back.  2020 ended up being one of the best years in the market.  

Stock  Watch  List

In my post last week, I shared a list of 35 Growth Stocks that were leading the market.  This week I have refined the list after the powerful rally we experienced last Friday.  I am looking for just a handful of stocks to take a very small position when IBD declares a  'Follow Thru Day'.  The list is of stocks that have an  RS  ratings of 90 or above, the  RS  line is attaining an all time high or pointing in an upward direction.  Most of these stocks are trading above the 34 day ema(exponential moving average).  They have withstood the market correction.  That's an indication that institutions would prefer to hold onto these stocks.  They are certainly stretched beyond the 50 day sma.  I have indicated price in parenthesis to be support/resistance area or the price I would prefer the stock to retrace to. 

Stocks:

1. $ATKR ... (67.75)
2. $BBBY ... (27.50)  
3. $DE     ...  (335.21)
4. $DT     ...  (49.13)
5. $FUTU ... (132.95)
6. $GBTC ... (42.85)
7. $GM     ... (52.26)
8. $GOOGL ... (2050 - 2095)
9. $GNRC ... (287.55)
10. $HI      ...   (46.96)
11. $HOME ... (23.89) 
12. $IDXX  ...  (490.00)
13. $INMD ...  (65.39)
14. $IR     ...   (47.78)
15. $LOB   ... (51.65)
16. $LYFT ...  (57.68)  
17. $LOVE ... (52.36)
18. $MHK   ... (178.19)
19. $OMF   ... (51.23)
20. $PII     ...  (121.35)
21. $QFIN ...  (18.38)
22. $RIOT   ... (32.25)
23. $SONO ... (34.65)
24. $SYNA ... (127.16)
25. $TDC    ... (39.83)
26. $TGH    ... (24.34)
27. $TWTR ... (66.02)
28. $UCTT ... (44.39)
29. $WAL   ... (91.88)
30. $WSM  ... (121.60)

Stay very engaged with the market this week.  Continue to review all stocks on your watch list and remove the ones that falter.  Add the ones that continue to maintain their momentum and trade above the 34 day ema.  All you need is just a handful of stocks to start dipping your toes back in the market when the market resumes it's uptrend.  

Good luck this coming week.

Happy Trading!

Amin

 

Stock  Watch  List 

Market is under pressure currently and it's best not to take any new stock position right now.  Prudent thing to have been doing last week was to trim down the stock position and not be tempted to be buying the dips.  Last year exactly around this time, market took a tumble and we corrected  -35%  in 35 days.  That was a painful lesson for us all to learn from.  What the market will do going forward is not something I would dare to predict.  The fact that the leading growth stock index  $QQQ  has sliced down past the 50 day sma(Simple moving average) and corrected  -6.42%  within 2 weeks is something retail investors should be really concerned about.  Preserving the capital is a priority right now.  Personally I have trimmed down the total number of stocks in my portfolio from 10 down to 5 in the last 2 weeks.  Raising  CASH  is my primary goal.  Last time around Sept 2nd,  $QQQ  corrected  -12.6%  within 3 weeks.  Growth stocks would tend to correct 2 times faster n deeper than what the  $QQQ  would normally correct.  

Market correction is a normal thing to expect when we have made such a great run since the lows attained on March 23rd of 2020.  If you have doubled your portfolio since that time than congratulate yourself for a job well done.  We will once again have the opportunity to attain gains, once the market settles down and shakes out the weak holders.  We just need to allow the true market leading stocks to consolidate the gains and form a new base.  Allow the 50 day sma to catch up with the 21 day and 10  day sma.  Lots of leading stocks are very far extended from the 50 day sma currently and that sort of progress is not sustainable.  If your stock has attained  +20%  to  +25%  gains, it makes sense to trim down the position and just maintain a small core position.

I have developed a stock watch list of stocks that had at one time gapped up with strong volume or had make quick gains of  20%  or more within 3 weeks.  These stocks are supported by the institutions and did not fall down to the 50 day sma.  Some of them are hovering above the 21 day sma.  Some have bounced off the 50 day sma.  These are the characteristics of stocks that are  supported by the institutions.  They are held up and accumulated while the market is correcting.  It would be best if they retrace a little bit and consolidate the gains to form a new base.

Stocks:

1. $ASML
2. $ALGN
3. $APPS
4. $AXON
5. $ATKR
6. $BBBY
7. $DE
8. $DQ
9. $ETSY
10. $FRHC
11. $FUTU
12. $GBTC
13. $GNRC
14. $HOME
15. $IDXX
16. $INMD
17. $LOB
18. $LOVE
19. $LRCX
20. $MXL
21. $PINS
22. $PLT
23. $QFIN
24. $RCII
25. $RIOT
26. $SI
27. $SNAP
28. $SONO
29. $SYNA
30. $TDC
31. $TGH
32. $TTGT
33. $TWTR
34. $WAL
35. $WSM

Good luck trading this week.

Don't stress and allow the market to do it's thing.

Patience is the key and sell your stocks into strength to raise  CASH  now.  Just a quick reminder to all my followers on blogger and tweeter:

CASH   IS   A   POSITION   TOO

Happy Trading!

Amin

Lessons Learnt Trading $PLTR

Follow The Rules: 

Growth Stock investing utilizing IBD(Investors Business Daily) methodology is a  "Rule Based"  system of investing.  Following their prescribed rules of:

• Buy Rules
• Sell Rules
• Market Rules

helps you to mitigate losses and helps preserve your portfolio capital.  It also helps you lock in profits at appropriate levels and increase the size of your portfolio.  United Airlines flight 328 on Feb 20th had an engine blow out soon after take off but the pilot remained calm and followed the rules of emergency landing.  The plane was headed to Honolulu from Denver.  That's a long flight over the Pacific Ocean and it carried a lot of fuel.  Following the rules helped mitigate the risk.  Same is true with any profession.  Physicians follow the rules of diagnosing and treating the patients appropriately following the prescribed protocols.  Investing and trading growth stocks is a profession and rules have to be observed.

$PLTR  stock position was initiated on Jan 15th after the stock was trading tightly and methodically for 5 weeks.  4 more positions were scaled in as the stock began making quick  +20%  gain within days in volume that was 2 to 4 times the daily average trading volume.  By Jan 27th (8 days into the trade), 1/2 of the total position was closed out to lock in  +39.10%  gains.  Since the stock surged more than  +20% within days, it invoked the  "8 Week Hold Rule".   It will be held until mid March and evaluated again.  Following the rules of IBD helped lock in the profits.

I have rules about holding onto the stock during the earnings report.  As a general rule, I trim my holdings to 1/2 or more prior to earnings report release if the stock has not advanced  +20%  with my initial position.  This time I violated my rule and held the 1/2 position that was left over plus the 2 additional small position initiated just days before the earnings release.  Stock dropped -12.75%  the next day after the earnings were released after market close the day before.  

Ouch !  Ouch !  Ouch!

That was a very painful.  Stock dropped even further the following day and it sliced down the 50 day sma(Simple Moving Average).  My personal rule is to draw a line in the sand at 34 day ema(Exponential Moving Average) for all my positions to give ne a heads up to mitigate losses.  I ignored that rule too this time.  My average cost of the remaining position was  $29.80 carried through the earnings announcement.  Feb 17th, the position was closed off at $28.58 for a loss of -4.13%.  Had I closed off the position the day prior to earnings release, stock would have been  +4.93%.  Had I stuck to my rules, my portfolio for this stock would be  +9.06  beyond the  +39.10%  gained for the 1/2 position that was closed off earlier. 

Plan For $PLTR This Week

On Friday, the stock was trading at $29.00.  It surged  +14.75% with average trading volume that is 6 times the normal.  It traded almost as many shares as the day of it's IPO.  You know it's the institutions (I include the Robinhood traders that band togather going after a stock).  320 million shares changing hands on Friday is a sign of institutional interest in the stock again.  Other stocks in this group are  $DT,$APPS,$DOCU and $RNG that are all trading above the 10 day sma.  On Monday I will determine if there is a follow thru increased volume and the price with  $PLTR.  I have set my target of entry between $29.75 - $32.65  for now.

I am attaching a 6 minute video of Mr William J O'Neil explaining some of the basic rules of Buying and selling Growth Stocks.  It was a good reminder for me to listen to his rules and obey them.  

https://youtu.be/IhsrJap6Oj0

Happy Trading!

Amin

 

How to Succeed at Growth Stock Investing

   

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 (Founder of Investors Business Daily)

2020 was one of the most profitable years in the market.  Exactly a year ago, we had attained an all time high with  $QQQ  only to face a severe decline of 1% per day for the next 35 days until the lows attained on March 23rd.  Just as quickly the market reversed course.  $QQQ  is  +71.38% since the March 23rd lows.  Some of the leading growth stocks have attained double digits in the same time period.  

$PYPL (+208.38%) and $RH (+424.58%) have attained such gains since the  "Follow Thru"  day of April 6th 2020.  $NIO (+188.54%) gains attained since the  "Follow Thru"  of Sept 30th.  These 3 stocks are my largest positions out of the 8 that I currently own.  In order to attain out size gains in the market utilizing the IBD (Investors Business Daily) principles one must:

• Buy High and sell Higher.
• Scan for stocks that are the leading stocks in the leading sector.
• Buy stocks that have an RS ratings of 90 and higher.
• RS line on IBD stock charts that are pointing up and between 12 and 3 on a clock.
• RS line attaining all time high.  It's even better if the RS line is attaining an all time high before the price does.
• Concentrate portfolio to just a few leading stocks and do not diversify.
• Have the discipline and a routine every weekend to review 100 to 150 stocks that are leading the market.  Annotate as many charts as you can with buy points.
• Develop a daily routine before the market opens and after the market closes to review the portfolio and trade plan for every stock position taken.
• Follow the rules of cutting losses with every stock.
• Do not buy cheap stocks or stocks that have a daily trading volume of less than 500,000 shares.

Following is an interview of Mr. Jim Roppel conducted by Mr. Richard Moglen.  Mr Roppel is a hedge fund manager and a disciple of Mr. William J O'Neil.  He self taught the IBD system of trading and has remained disciplined with his daily and weekend routine of scanning hundreds of stocks.  One of the things that impressed me the most was that 80% of the money he made most money in was in just 4 names.  Monster stocks takes time and patience and one must build the position gradually over time. 

https://youtu.be/S72pwDRbK4o

Good luck trading this week.  Market is a bit extended currently and it's a good idea to start raising some CASH at this time.  Harvest partial profits in stocks that have attained gains of  +25%  or more.  $CCIV  last remaining shares were closed off at $36.60 on Friday Feb 12th for  +161.76%  gain.  It's a stock that has gone parabolic ever since breaking out 5 weeks ago.  It needs to retrace or trade sideways to allow the 50 day simple moving average to catch up closer to the 21 day moving average.  It is staying on my watch list for the next couple of weeks.  

Happy Trading!

Amin

Bill Ackman: How to Evaluate Stock's Worth?

Bill Ackman works with a very small group of people around him (less than 10) unlike other hedge funds that employ lots of people.  He also concentrates his portfolio to just a select 10 positions approximately.  

Mr William J. O'Neil (Founder of Investors Business Daily) has a whole chapter devoted to:

"Money management"  

in his book (4th edition)  "How to make Money in the Stock Market".

He recommends not to have any more than 8 to 10 stock positions if a retail trader/investor has a $Million portfolio.  For someone with less than  $500,000 portfolio, 6 to 7 stock positions is considered ideal.  

Hope this video inspires you to get involved with trading Growth Stocks.  We are in the greatest bull market that could last until 2025 or longer.  Learn the Growth Stock investing system of Investors Business Daily to Out Perform the Market. 

One of the things that inspires me about investors like Bill Ackman and Warren Buffett is that they have made a commitment to leave a large part of their fortunes for the public good.  It's their way of paying forward.  

Happy Trading!

Amin 

Concentrate Your Portfolio to a Few Stocks 

It seems counterintuitive to concentrate your portfolio to just a few stocks but that is exactly what retail investors/traders should be doing.  Conventional wisdom suggests that one should diversify their portfolio.  

Wrong !  Wrong!  Wrong!

That is what we have been reading in the print (newspapers, investment magazines and blogs posted by self proclaimed gurus of the market) and TV media.  We have been taught by the financial advisors to invest in all different asset classes and diversify to reduce risk.  That is the way to mediocrity in my view.  When you diversify, you are actually exposing yourself to more risk across all different asset classes if you really think about it.  If you want exceptional performance results in the stock market than one must:

• Invest and trade growth stocks.  They tend to do 2 to 2.5 times better than the general market does.
• Identify true market leaders and have them on your watch list every week.  Figure our exactly when and where the ideal buy points are.  Have a plan in place to trigger your buys on those stocks.
• Always be ready to make initial small buys when IBD (Investors Business Daily declares a  "Follow Thru Day".  
• Build up  CASH  reserves in your trading account when the market pulse down grades to  "Market Under Pressure"  or  "Market in Correction".  CASH  is a position too.

Mr William J. O'Neil (Founder of Investors Business Daily) and the author of the book:

  

"How to Make Money in Stocks" (updated 4th edition)

has a whole chapter 12 in the book devoted to  Money Management.  I would highly recommend that you obtain a copy of this book and read it over several times.  I have 2 copies of the book - one by my bedside and one in my office at home.  It's one book that I always take with me when I travel.  Following is a quote from his book that resonates for retail investors/traders:

The more you diversify, the less you know about one area.  Many investors over diversify.  The best results are usually achieved through concentration, by putting your eggs in a few basket that you know well and watching them carefully

The winning investor's objective should be to have one or two big winners rather than dozens of very small profits.  Broad diversification is plainly and simply often a hedge for ignorance.  

Guidelines for # of Stocks in Your Portfolio

Following is a guideline that I utilize for retail investors that are actively participating in Growth Stock investing and trading.  If your portfolio is:

• Less than $100,000 - 3 to 4 stocks.
• $100,000 to $200,000 - 4 to 5 stocks.
• $200,000 to $500,000 - 5 to 6 stocks.
• $1,000,000 - 7 to 8 stocks.

When the market gets a  "Follow Thru Day", it would be quite OK to have a couple of more positions initiated than what the above guideline suggests.  Within a very short time, the laggards should be closed off even if they are in positive territory.  You want to force feed the  CASH  into the true market leaders that are outperforming.

It becomes hard to manage your portfolio effectively and build up a position in the winning stock over time.  Investors that had effectively a well diversified portfolio of  20  to  30  stocks, had to deal with the market crashes of   57%   in  2008/2009 market crash or  35%  crash recently  from Feb 19th through March 23rd.  Diversification certainly did not work and it never does.  It provides the retail investors with a false sense of security.  Utilizing the IBD principles, retail investors would be able to quickly transition gradually to  CASH   when the market begins to correct.

I am getting off to prepare myself for the big even tonight.  It's Sunday night here and my local team  TAMPA BAY BUCS  are playing with a home field advantage.  It's an exciting time for us in the Tampa Bay area.  

Go Bucs so We all can All Make the Big Bucks in the Stock Market

Happy Trading!

Amin