$MRNA  +53.92%   Since  Follow  Thru  Day

"The first step in learning to pick market winners is for you to examine leading winners of the past to learn all the characteristics of the most successful stocks."

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

"Recurring patterns occur over and over because stocks are driven by humans and human nature never changes."

By Jesse Livermore (Greatest stock trader of our times)

https://youtu.be/KOVEzCIGAyA

I am posting a video of Mr. William J. O'Neil (Founder of Investors Business Daily).  He takes the time to explain the skills required for reading and understanding the stock charts.  The stock charts express the human behaviour of the institutions (hedge funds, mutual funds, pension funds) who control  70%  to  80%  of the daily trading volume that occurs in the stock market.  Most retail traders are focused on the news media about the pandemic and unemployment numbers of 22 million people that are filing for unemployment.  Last week we heard in the media about the breakdown of oil prices.  Some of the Growth Stocks have been breaking out during the last 3 weeks since April 2nd when we had a  "Follow Thru"  day.  It's best to social distance from the print and tv media coverage.  It's better to be data driven and let the stock charts tell you the story instead.

Past history of the stock market suggests that when we get a successful  "Follow Thru"  day, leading stocks tend to gain  +20%  to  +30%  or more within 2 to 3 weeks of such days.  In my post on Sunday March 29th, while the market was still under correction, I had published a list of 19 stocks that I was monitoring.  They had  RS  ratings of 94 and above with the  RS  line reaching all time highs.  They were all trading above the 50 day sma (simple moving average) and some of them were  trading above the faster moving 20 day sma.  These were the leading stocks while the market was under correction.  $SPY (general market performance index) and  $QQQ (growth stock index)  were trading below the 200 day sma at that time.  If one had invested in all these stocks on  Friday April 2nd  at market open (Following the IBD rule of dipping your toes in the market with a small starter position during a  Follow Thru  day), the results of each of those stocks as of Friday April 24th (3 weeks) is highlighted below:

Stocks on my watch list:

1. $AMZN   ... +26.11% (gapped up Jan 21st)
2. $AMD     ... +26.82%
3. $CHWY  ... +25.00%
4. $DOCU  ... +24.70% 
5. $DXCM   ... +26.11% (gapped up Nov 7th 2019 and Feb 14th 2020)
6. $GSX      ... -15.47%
7. $MSCI    ... +14.78%
8. $NEM     ... +30.76%
9. $NFLX   ... +18.10%
10. $NVDA   ... +14.03% (gapped up Feb 14th)
11. $PLMR   ... + 3.36%
12. $RNG     ... + 9.01%
13. $TEAM   ... +18.54% (gapped up Jan 24th)
14. $ZM         ... +27.76%
15. $XLRN    ... +20.52% (gapped up March 2nd)
16. $KPTI     ... +43.89% (gapped up March 2nd)
17. $MRNA   ... +53.92% (gapped up Feb 25th)
18. $MNTA   ... +33.86% (gapped up March 10th)
19. $RCUS   ... +91.29% (blog post April 19th)

Average return for all 19 stocks ... +26.02%

$SPY  returns during the same period ... +12.85%

$QQQ returns during the same period ... +15.28%

Stocks on my watch list performed  +70%  better than the  $QQQ and performed  +100%  better than the  $SPY.   

Happy Trading!

Amin

111%   Gains   in   2  weeks

"Obstacles are those frightful things you see when you take your eyes off your goal"

Henry Ford, car producer.

"It is not the strongest of the species that survives, nor the most intelligent, it is the one most adaptable to change."

Charles Darwin, biologist.

IBD (Investors Business Daily) has an  '8 Weeks Hold Rule'  for stocks that show strong institutional demand.  The rule suggests that if the stock attains a  +20%  gain or higher from its proper buy point in less than 3 weeks, one should hold it for 8 weeks and evaluate the stock at that point.  Mr. William J. O'Neil (founder of IBD) found that quite often such stocks continue to make higher gains after attaining the explosive gains of over  +20%  within a short period of time.  Demand from the institutions is so great that the stock gets propelled higher from the sheer size of the demand from the institutions.  Institutions often curb their enthusiasm for the stock after attaining high price so quickly just so as not to exhibit their intentions of wanting to acquire more of the stock.


Quite often, the leading stocks of high institutional quality will gap up in price and attain an all time high overnight.  Institutions like hedge funds, pension funds, mutual funds and other professional money mangers are the reason for these gap ups in price overnight.  They have the strength of $$$ power to propel these stocks higher.  Quite often some of the leading stocks will attain a gain of  +20%  or higher within days and start consolidating the gains for the next several days or weeks.  Most of the high flying stocks that we know of today like $AMZN, $NFLX, $CMG, $NVDA, $NOW started their run to the high ground in a very similar manner.  In my blog post of January 20th, I had highlighted the story on  $CDLX  that exhibited the  '8 Week Hold Rule'.

$RCUS     Story

One lesson I have learnt trading the stock market for the last 25 years is:

 "Market  Fools  the  Majority"

That is one reason why every retail trader and an investor must stay laser focused on building a stock watch list every week.  It is best to social distance from all the media coverage on the virus.  It will depress you and stun you into inaction.  Let the stock charts tell you the story of what the institutions are doing.  Make decisions based on the data and not the hype of media coverage.  I had a list of 19 stocks that I highlighted in my blog post 3 weeks ago.  It looked like a very scary time to be in the market at that time.  $SPY  was in a free fall dropping  -5%  every week for the past 6 weeks.  No one had any idea that the market would just as quickly have a  'Follow Thru'   day with the  $SPY   on April 2nd.  Not all such days will materialize but if you follow the IBD (Investors Business Daily) rules laid out by Mr. William J. O'Neil (Founder of IBD), one must buy something with a test position on such days.  $RCUS   was a good candidate. 

• Feb 3rd, $RCUS  had a heart beat.  It traded with 8 times the daily average volume.  2 days later it punched through the high of  $10.96 attained on Dec 27th.  It began to consolidate for the next 2 weeks in a very tight and orderly fashion.  That's exactly what the institutions do to hide their interest in the stock.
• Feb 18th and 19th, institutions once again began accumulating shares of the stock with stock trading 6 to 10 times the daily average trading volume.  By Friday of that week (less than 4 days), the stock had attained  +20%  gain from the proper buy point of $11.06.   '8 Week Hold'   was established for this stock. 
• $SPY  had a  'Follow Thru'  day at market close on Thursday April 2nd.  Initial test position (10% of the total position) was established at market open for  $15.16.  10 day sma(simple moving average) had crossed over the 50 day sma the next day while both the  $SPY  and  $QQQ  were still hovering below the long term 200 sma.  
• $QQQ  had a  'Follow Thru'  day the following Monday April 6th.  This gave a good confirmation that the institutions were beginning to put more of their monies at risk by investing in the Growth Stocks.  Another position (10% of the total position) was added at market open the very next day at $15.85.  Stock was once again trading nice and tight and orderly - just as it did in early February.
• Within a week on April 16th Thursday, stock shot up 44.60% past the high of $20.40 attained on March 6th.  Market was in correction in early March but this stock was attaining all time highs while the the general market was slicing below the 200 day sma. 
• Once again the stock established another  '8 Week Hold'  rule.  Stock had a trading volume of over 20 times the regular average daily volume when it shot up on April 16th.  
• 10% stock position that was initiated at $15.16 on the first  'Follow Thru'  day just two weeks ago, was closed out Friday April 17th at market open for $32.00.  That is a gain of  +111%  within 2 weeks.
• 10% stock position that was initiated on April 7th will be held and monitored for the next 8 weeks.  10 day/20 day/50 day sma are all turning up sharply and the  RS (relative strength) line is at all time high.  RS ratings is at 99 currently (highest ratings).  This position is  +77%  and one can fully expect the stock to consolidate for the next few days to couple of weeks.  As a retail trader, you want to give this stock some room to breath before it makes a higher high. 

Expect the market to consolidate and retrace some this week.  $QQQ  has gained over  +15%  in the last 2 weeks.  Most Growth Stocks tend to break out within a week to two right after the  'Follow Thru'  days.  If you feel like you have missed the boat than don't fret.  You will get a second chance with some of these breakouts when they bounce back up from their 50 day sma with above average volume of shares traded.


Keep building your stock watch list every week.  Don't be consumed with every little details of the virus.  Stay laser focused with the market and let the data guide your decisions.  Be disciplined and learn as much as you can about the markets.  Observe the IBD rules of buying and selling a stock.



Happy Trading!

Amin

Relative    Strength

If you turn over 10 stones, you might find 1 attractive investment idea but if you turn over 100 stones, you might find 10.

By Peter Lynch (Manager of Magellan Fund 1977 - 1990)

$SPY  is up nearly  +25%  since it hit the bottom on March 23rd - 13 sessions ago.  We had a  "Follow Thru"  day on April 2nd with the  $SPY.  Monday April 6th,  $NASDAQ  posted  a  "Follow Thru"  day as well.  $RUT  has bounced up over  +18%  from its low attained on March 18th(16 trading sessions ago).  These are all good signs of institutions getting back in the market.  Retail investors should have started taking very small stock positions on Friday April 3rd.  It's quite possible that the market could fumble and test the lows of March 23rd.  Both the indexes - $SPY  and  $QQQ  are still below the 50 day sma(simple moving average).  That is a big negative.

One of the tools to utilize to build a stock watch list is  Relative Strength (RS) of a stock.  During market correction, look for stocks that are holding up well relative to the general performance of the market as expressed by the performance of  $SPY.  Identify stocks that are not correcting as much and resisting the correction.  Institutions control  75%  to  80%  of the daily trading volume in the market.  Stocks that are holding up well during correction is an indication that the institutions are holding onto them while dumping the laggards from their portfolio.  That is how you identify stocks that make big gains over a period of several weeks, months and years.  That is how one lands winning stocks like $AMZN, $NFLX, $CMG, $TSLA, $NVDA and others.  These are the stocks that barely budged during market correction before they made their triple digit gains.

IBD(Investor's Business Daily) plots a blue line (RS line) under the price bars.  Rising blue line relative to the  $SPY  line indicates that the stock is performing better relative to the general market as expressed by the performance of the  $SPY.  There is also an RS ratings number listed at the end of the  RS line.  This number compares the stock to all the several thousand stocks that are on IBD's data base.  1 is the lowest and  99  is the highest rated stock.  Personally I only look for stocks that exhibit an RS ratings of  95  or greater.  These are the best of the best Growth Stocks.  They are the ones that have a higher probability of making huge gains when we experience a  "Follow Thru"  day.

  Stock Watch List with High RS ratings and RS line

In my post 2 weeks ago (March 29th blog post), I had a list of 19 stocks that were some of the leading stocks while the market was correcting.  They had corrected less than the  $SPY  and were trading above the 200 day sma while both the  $SPY  and  $QQQ  were well below the 200 day sma.  A very small test position on 9 of these stocks was initiated on Friday April 3rd at market open.  These stocks were trading above the 50 day sma while the  $SPY  as well as  $QQQ  were below the 200 day sma.  3 of the 9 stocks survived my strict criteria of selecting stocks that exhibited a high  "Relative Strength"  and an  RS  ratings above 95  since the  "Follow Thru"  day.  Their performance during the last 5 trading sessions is:

1. $XLRN   ... +8.77%
2. $MACI   ... +9.77%
3. $NEM    ... +18.62%

Average performance for all 3 stocks is  +12.39%.

$QQQ  performance was  +8.59%

$SPY  performance was  +10.94%

Utilizing  Relative Strength  line and  RS  ratings above 95 resulted in identifying stocks that outperformed both the  $SPY  as well as  $QQQ.

Happy Trading!

Amin

Follow    Thru    Day

"First, do not be invested in the market all the time.

There are many times when I have been completely in cash, especially when I was unsure of the direction of the market and waiting for a confirmation of the next move.

Second, it is the change in the major trend that hurts most speculators."

Jesse Livermore (World's greatest stock trader of our times)

Investors Business Daily declared a  "Follow Thru"  day on Thursday April 2nd after the market close.  That is the market timing signal growth stock investors use to initiate a small testing position in the leading stocks.  We had reached a market bottom on March 23rd with the  $SPY (general market performance index) and March 16th with the  $QQQ (growth stock performance index).  These indexes started making an attempted rally for the last 2 weeks and did not undercut the lows attained in late March.

Did you initiate a stock position last Friday?

This recent "Follow Thru"  day has a lot of flaws.  They are:

1. Both the indexes,  $SPY  as well as the  $QQQ  are submerged below the 200 day sma(simple moving average).  They are prone to failure.
2. $QQQ  is 8% below the 200 sma while the  $SPY  is 15% below the 200 sma.  That is a lot of overhead resistance for these indexes to overcome.
3. Trading volume during the attempted rally by these 2 indexes was less than the trading volume of panic selling that occurred in the last 6 weeks.  That does not indicate to me that the institutions are ready to support the market right now.
4. 50 day sma still has a pronounced downward slope heading to the 200 day sma.  It's preferable to have that slope flatten out.  We need some more time for the market to consolidate.
5. Technical damage done to the 2 indexes mentioned has been very severe.  It took 16 weeks for the  $SPY  to attain a gain of +14%  and  $QQQ  +24%  from mid Oct 2019 to mid Feb 2020.   All that was wiped out within just 5 trading sessions in late Feb.

One of the positive things that I noticed with the two indexes is that the faster moving 10 day sma has turned up and attempting to crossover the slower moving 20 day sma.  I would like a confirmation from the institutional investors to start coming in with a buying spree this coming week. 

Mentoring  and  Coaching  Program

The market carnage we faced in the last 6 weeks was brutal to the retail investors that were not prepared.  We had a great bullish run from Feb 2016 to February 2020.  All that hard work and profits attained in the last 4 years have been given back.  This might be a good time to look over your trading and investing process.  Make an honest assessment of your methodology and seek help if you are getting frustrated with your performance.  Here are the real facts and data:

$QQQ - the leading Growth Stock Index doubled from Feb 2016 to Feb 2020

You should be asking yourself that very question.  A passive investor would have doubled their portfolio by just investing in  $QQQ  and not deal with sleepless nights.  The reason why a retail investor and a trader manages their portfolio and invests time in the market is because one wants to do better than the average performance of the indexes. 

We will be embarking on the greatest financial opportunities of our lifetime once the market settles.  Right now what we are witnessing is the wobbly legs with the market.  When you have an open heart by pass surgery, you will need time to recuperate before you can start running.  This market will take time to consolidate and regain its footing.

I shall be opening up very limited spots for the month of May and June for individualized mentoring.  This may be the last time I shall conduct such training.  This second quarter would be a perfect time to get educated with my process of:

• Identifying  WHAT  stocks to buy.
• Identifying  WHEN  to buy the stocks.
• Learning  HOW  much to buy initially.
• Learning to  SCALE  in and out of the stocks.
• Developing a  TRADE PLAN  for every stock position.

Contact us at:

investorspotlight@gmail.com

Schedule a  FREE   "Discovery Call"   with us and let us show you how our program can best help you with investing and profiting in the stock market.

Happy Trading!

Amin

FOCUS  ...  Be  Patient  and  Stay  Calm

"Obstacles are those frightful things you see when you take your eyes off your goal."

Henry Ford, car producer

There is a lot of noise and fear out there in the market.  Listening to the news media and watching tv all day long is not going to stop the pandemic.  Do the right thing and just stay home.  Don't engage in conversations on social media about the pandemic or the stock markets.  It's going to depress you and compromise your immune system.  Use your time wisely and instead:

• Get a good night sleep.  You now have an opportunity to catch up on your sleep.
• Start your day performing stretches and light exercises.  You always wanted to get in shape and now you can actually follow your New Year's resolution.
• Eat a healthy breakfast to start your day.  It will help you kick start your day without the pressures of having to run out the door to your job.
• Get dressed up as if you are going to work or school.  Now is a perfect time to polish up your trading skills and look over your weaknesses.  
• Take an online class on trading and investment.  Watch some utube videos of some of the professional money mangers.  Learn what traits and discipline they possess that makes them successful.  
• Communicate with friends, relatives and acquaintances that motivate you and keep you energized.
• Learn to read stock charts and back test your system of trading and investing.
• Polish your system of trading and write it down.  Identify your rules of when you will buy stocks, when you will sell them for a profit or a loss and how long will you hold on to that stock.  This will be your system of rules that will help you develop a Trade Plan for every stock you initiate a position on.
• Prepare and update your stock watch list everyday.  Do lots of  "Virtual Trades"   (utilizing your brokers platform on your virtual account) and back test your system.

Market   Condition

Market has been attempting to rally for the last 2 weeks. It has not undercut the bottom we had reached on  $QQQ  on March 16th or the  $SPY  on March 23rd.  $XLK(technology sector)  is the leading sector during this bear market and it too reached the bottom on March 23rd.  Institutional buying volume has not exceeded the selling volume we had that led us to the bear market.  That is a big negative with this attempted rally.  We could experience a  "Follow Thru"  day if the above 2 indexes continues to head higher and not undercut the lows of March 23rd.  

Market skipped a beat on Feb 24th and Feb 25th.  It's beginning to recover slowly.  Big negative is that both the  $SPY  and  $QQQ  are trading below the 200 day sma(simple moving average).  If we do get a  "Follow Thru"  day, it's likely that it might fail.  The technical damage done to the market is very severe.  I have not witnessed this sort of a damage in my life time.  There is sheer panic.  It's also quite possible that we might test the lows of Dec 24th 2018 with the  $QQQ  and the lows of Nov 4th of 2016 with the  $SPY.  That will take us down to  -50%  correction from the all time highs we reached less than 5 weeks ago.  It's best to head into the next week with an open mind.  Let the market tell you when it's ideal time to get in the market and keep emotions and ego in check.  It's better to spend the time to prepare a stock watch list instead of being consumed by the pandemic and market chatter in the media. 

Stock   Watch   List

Here are some of the stocks that I consider to be the next leaders when we get a  "Follow Thru"  day.  They are all above the 50 day sma and showing a high relative strength of  95  and above.  Some of them are already extended.  Such extended stocks may provide an opportunity if they retrace to the 50 day sma and continue exhibiting an RS ratings  above  95.  I have highlighted  the price in parenthesis that I am monitoring.  These are not to be construed as buying points.  This is my list for you to use as a guide to help you learn to develop your own watch list with an appropriate entry point.  

1. $AMZN   (1954.51)
2. $AMD      (   49.25)
3. $CHWY   (   34.90)
4. $DOCU   (   92.65)
5. $DXCM   ( 275.90)
6. $GSX      (   42.07)
7. $MSCI     ( 296.40)
8. $NEM     (   45.71)
9. $NFLX    ( 359.85)
10. $NVDA   ( 259.50)
11. $PLMR    (  55.67)
12. $RNG     ( 252.30)
13. $TEAM   ( 156.22)
14. $ZM       ( 137.25)   
15. $XLRN    (  92.38)
16. $KPTI     (  22.00)
17. $MRNA   (  26.55)
18. $MNTA    ( 31.90)
19. $RCUS    ( 12.06)

Stay Safe

Stay healthy in body, mind and spirits.

This pandemic and the bear market will come to pass.

Trust and believe in yourself.

Good days are ahead of us to recapture what we have lost in the market.

Happy Trading!

Amin 

C A S H     is     K I N G

Realities of a trader

1. Losing money makes us feel inadequate.

2. Making money (but never enough) makes us feel inadequate.

3. Being on the sidelines makes us feel inadequate.

A purpose of the market is to make us feel inadequate.

Welcome to the life I've lived for 45 years

By. Peter Brandt (Trader of classical charting principles since 1980)

These are very difficult times in the market.  I have been through the market crash of 1987 as well as 2000 dot com bubble and  finally the 2008/2009 real estate market bubble.  It's always a gut wrenching experience.  It feels like there is never an end in sight.  You experience portfolio erosion and worst of all your confidence as well.  I have not witnessed the devastation of the  $SPY  (down -32%) and  $QQQ (down -29%) within 4 weeks from an all time high attained on February 19th.  There is no end in sight and the selling by the institutions (hedge funds, pension funds, mutual funds) is relentless.  This drop into the bear market territory has been fast and furious.  There is sheer panic in the market.  As I have mentioned in some of my posts, you might as well throw out all your books on fundamental, technical and value investing out the door with sort of carnage in the market.

I have my Growth Stock trading process in place and I often mention the 50 day sma(simple moving average).  When either of the two indexes - $SPY (general market performance) and/or the $QQQ (growth stock performance) trade below or close at that level, it's time to get defensive immediately.  Utilizing 34 day ema (exponential moving average) for individual stock for scaling down the position and raising  CASH  is also a good signal to follow.  CASH  should be considered as a position too.  It's the ammunition in your portfolio to deploy when the market resumes it's uptrend.

February 25th, both of the above 2 indexes were trading below the 50 day sma.  If one had gotten out of the market at that point, one would have suffered just a  -5%  loss and not a depressing  -29% loss.  CASH  would have been preserved and the portfolio would not have suffered such a depressing erosion.  If this institutional selling continues this week, it's quite possible these two indexes could drop down another  -11%.  Next support level for  $SPY  is at around 210.  It's a wait and see situation.  Allow the market to tell you when to start nibbling and start deploying your  CASH  back in the market.  In the mean time, stay engaged with the markets and continue to build your stock watch list.

Strategies   for   the   coming   Week

We are all going through some very difficult times right now in the market.  Lot of us are scared and anxious.  We have an unknown component in the market as well as in our personal lives that we have not faced before.  It feels like the sky is falling.  Our older generations had faced the 1929 depression and the second world war.  My generation dealt with the lines at the gas station from the Arab oil embargo in the 70's and high unemployment and inflation rates in the 80's.  It's hard to believe that we had mortgage rates of  12%   at that time.  Inflation was so high that we had  a  "Wage and Price"  controls in our  FREE capitalistic society.  We did survive the terrorist attacks on 9/11.  This pandemic too will come to pass and we will all come out stronger and better because of that.  Market will always be there for us.  Few things I suggest we all do this coming week is: 

• Stay calm and don't panic.  It's not the end of the world.
• Don't focus too much attention on all the postings you get in social media.  It will depress you.  It's not important to know everything in the market or every details of the pandemic storm.
• Take the time to read some good books and enjoy the company of your family and your pets.
• Watch some movies and educational TV shows to sharpen your knowledge.
• Go out for a walk in your neighbourhood with your children and loved ones.  Being out in the sun and taking in the sights and sounds of spring will rejuvenate you.
• Slow down and smell the roses.  Live in the moment because that's all we have.
• Pursue some of your hobbies.
• Take an online course and watch some utube videos to sharpen your trading skills.
• Universe is teaching us all a very important lesson right now.
• Don't hoard your knowledge or your expertise.  Share it.

https://www.realvision.com/shows/the-interview/videos/the-psychology-of-high-performers

The Interview · Featuring Dr. Gio Valiante

Published on: March 2nd, 2020 • Duration: 44 minutes

Watch this interview by Real Vision with Dr. Gio Valiante

"Psychology of High Performers"

It's a 44 minute interview.  I have watched it several times already and have it archived in my library. 

Enjoy 

Happy Trading!

Amin

Lessons  Learnt  With  Market  Correction

"On some level, our goal as traders is to make as much money as possible when it's EASY to make money, so that we can stay on the sidelines when it's HARD to make money"

By Yvan Byeajee - Trader

Market topped out on Feb 19th after having made a consistent slow and a steady run for 18 weeks along the 10 day sma (simple moving average).  All hell broke loose on Feb 20th.  $SPY and $QQQ  just sliced through the 50 day sma within 3 sessions.  Lot of retail traders were just stunned into inaction.  In the following  4 trading days, both the indexes plunged down vertically to the 200 day sma.

Ouch !   Ouch!   Ouch!

I had gone away for two weeks in February to Mexico and I too was caught off guard with this sudden move.  The indexes were telling us a very clear story with 8  "Distribution Days"  piled up within a week between the  $SPY  and the  $QQQ.  I have been leading 3 of the IBD (Investors Business Daily)  monthly Meetup groups in the Tampa Bay area for the last 6 years where I share my observations of the markets during our monthly meetings.  Some of the lessons that I have shared with them when market rolls over into a correction territory are:

1. It usually takes just 3 to 5 trading sessions to bring the  $SPY  and the  $QQQ  from its top all the way down to the 50 day sma.  Monitor daily what these 2 indexes are doing. 
2. Growth Stocks tend to move down 2 to 3 times faster than the general market does when it goes into correction.
3. Utilize the 34 day ema (exponential moving average) as a line in the sand to mitigate losses from market correction.
4. Always have a Trade Plan in place before executing any stock position.  Plan for a loss of no more than  6%  to 7%  from original entry.  Have a plan in place to harvest some profits when it reaches  +20%  to  +25% from entry.
5. Keep your mind focused on the stock and Index charts and not the news or how you feel about the market.  Market is designed to fool you.  
6. Be neutral in your thinking and observe what the market is doing.  It's not important to know why.  Leave it for the self proclaimed market GURUS that write columns and show up on tv shows.  They are not here to teach you and make you money.    

Market   Performance

In took 18 weeks for the  $QQQ (leading growth stock index) to gain  +24%.  All that was given up within 16 days of the market correction.  It's critical that we all learn a lesson from this and never give back all the gains made in the market during it's bullish run.  The last time we had such a correction was last year right around the Christmas holidays.  There comes a point when the institutions stop liquidation and recognize the beaten down stocks.  Their strength of $ volume of their buys creates the strength in the market.  We had such a day last Friday when both the indexes jumped up  +8.5%  in price.  The only negative was that the volume did not exceed the selling volume from the day before.  We need for the  $SPY  and the  $QQQ  to continue to move up in price with volume strength.  We could have a  "Follow Thru"  day  if we get a total of 4 days of attempted rally in the market in the next 10 days.

Currently  the  $SPY  is  13%  below the 200 day sma but the  $QQQ  is only  5%  below the 200 sma.  Leading sector  $XLK (technology sector) is only  1.23%  below the 200 day sma.  That is where one ought to be looking for opportunities when we get a   "Follow Thru"   day.  Market has exhibited stomach churning volatility in the last 3 weeks.  Both these indexes have been moving up or down by  8%  to  9%.  It's prudent that the retail investors start out with a very small position - maybe 15% to 20%   of the full position  -  to test out the market when the market goes back into a confirmed uptrend.  This will help one mitigate losses, should the market turn against you from the extreme volatility.  It's likely that the first couple of  "Follow Thru"  days may fail.  There is a lot of technical damage done to the stocks and it will take a while for some of the leading stocks to build a proper base.

Good luck this week and Happy Trading!

Amin