$GNRC

This is an institutional quality stock that has been appearing on IBD 50 screen for the past year.  It used to be a stock ranging in price between $50 and $60 just 2 years ago and trading less than 500,000 shares per day (less than $60 million ... share price x volume of shares traded per day).  Most institutions prefer to trade stocks that trade $100 million or more per day.  They prefer very liquid stocks because not only do they have deep pockets to acquire several billions of $$$ in their stocks of choice but also because very liquid stocks offer them the opportunity to trade very liquid options on the stock.

During the week of February 10th 2020, the stock shot up in price by +10% within 4 days of heavy trading volume.  Over $2.5 billion of trading occurred within 4 days with trading volume that had shot up by 15 times the daily average trading volume on February 12th.  This ought to get any traders attention when one notices such a huge spike in the sheer volume of shares exchanging hands.  Within 3 months (end of June) the stock had moved up from $117 to $193 (+65% move).  This stock immediately got on my radar and kept it on my watch list.  Patience is the key.  It takes a lot of time for the stock to digest these massive  gains.  Institutions normally take a breather after making such a huge run in price.

Here is a short synopsis of How I handled this stock to profit handsomely utilizing the basic IBD (Investors Business Daily) rules that Mr. William J O'Neil practices.

1. Oct 28 2020 ... Stock breaks out from its consolidation of 208.26 as a pivot identified on my chart.
2. Oct 30th 2020 ... Established an initial position @ $213.99 (It's + 110% as of Friday July 23rd)
3. Nov 12th 2020 ... Added additional position @ $224.30 (It's +100% as of Friday July 23rd)
4. Feb 11th 2021 ... Stock breaks out from $287.55 as a pivot identified on my chart.  It rises +20% within days - triggering the "8 Week Hold Rule".  This is a confirmation and a sign that the institutions are deeply committed to acquiring this stock.  
5. Identified $330.31 as a support/resistance area on my trading platform to alert me.
6. Stock consolidated for 3 months - Mar/Apr/May - to digest the gains of +300%  since its initial run from Feb 2020.  Several small positions were added between $300 and $325 to concentrate the portfolio to just a few leading stocks.
7. June 8th 2021 ... Stock breaks out from  $331.31 in volume of 3 times the average trading volume of the stock.  One can see the 8 day ema(exponential moving average) separating away from the 21 day ema and the stock making its run higher.  It never looked back.  The stock never corrected much while the market went into correction a week before.
8. Currently the stock is hovering around $440 identified as a 3 weeks flat base on my platform.  Earnings is due this week.  The last few additions to stock positions (additions made from $300 to $325)  were closed down for +40% profits.  
9. Stock is currently extended from its 50 day sma (simple moving average).  There is a lot of  "White Space"  between the 8 day ema and the 50 day ema.  Similar situation occurred on Feb 22nd when the stock made a gain of over +20% and triggered the "8 week Hold Rule".  History of the stock indicates that the stock tends to consolidate its gains after such a massive move.

Stock will be evaluated after the earnings are reported later this week.  It would be best for the stock to consolidate and form a new base from which to propel higher.  I am looking for the 50 day sma to catch up to the 21 day ema and fill up that space closer to the 21 day ema.

I hope this post helps you in identifying the leading stocks utilizing the IBD screens effectively.  Building a good stock watch list and annotating your stock charts would help you to track stocks that are of institutional quality.  Mitigating risk by harvesting profits prior to earnings is a good strategy to follow as well.  Patience is the key when you are monitoring stocks that are on your watch list.  Success of profiting in a leading stock is all about waiting for the right set up to increase the odds of a successful and a profitable trade.

Happy Trading this week.

Market tone has been updated by IBD to  "Market in Confirmed Uptrend".  It's a sign to start rebuilding your portfolio with new leading stocks or adding to the existing stocks in your portfolio with additional buys.  

Amin (investorspotlight@gmail.com)  

 Timing  the  Market

YES ... You can TIME the market

"Learn to always sell stock quickly when you have a small loss rather than waiting and hoping they'll come back"

By William J O'neil (Founder of Investors Business daily

Market has been treading water for the last 3 weeks and finally this week it exhibited major signs of stress.  $SPY  ( general market performance) as well as the  $QQQ (growth stock performance) seems to have topped out on July 14th and is now headed down towards the 50 day sma (simple moving average).  IBD (Investors Business Daily) changed the tone of the market down a notch to  "Market Under Pressure"  as of Friday July 16th close of session.  That is our first signal to:

• REDUCE exposure in the market and conserve CASH
• Harvest partial profits in stocks that have attained gains of +20  to +25%  or higher
• Close out losing positions or positions that you added to existing positions that are  showing losses.
• SELL  into strength - partial position - in stocks that are rising above the 8 day ema (exponential moving average)

If you are following the IBD style of investing in Growth Stocks and want to Out Perform the general market utilizing the performance of  $SPY  -  proxy for general market performance - it's critical to control your losses  NOW  when the market is not going anywhere and heading lower.  Market will once again provide you with the opportunity to invest in new and up coming leaders and you want to have the   CASH  available and ready to invest once the market rights itself.

Recent  History

One of the visual indication that I often look for on daily stock charts is the distance between the 8 day ema and the 50 sma.  I often call it the   'White Space'.  Those of you that attended my monthly IBD Meetup sessions in the Tampa Bay area, I often used to show this white space on stock charts and charts of the 2 indices ($SPY and $QQQ)  to highlight when they are extended.  During the last 5 recent corrections in the stock market that we went through, you will notice visually that there was a wide white space between these two moving averages.  We are at that juncture in the market at this time.  One should be prepared with the scenario that the market could very easily drop down to the 50 sma - a drop of -5% or more.  Utilizing recent history as a guide, this is what occurred during the last 4 brutal correction:

1.  Feb 19th 2020 ... -35%
2.  Sept 2nd 2020 ... -10%
3.  Feb 16th 2021 ... -11%
4.  Apr 29th 2021  ...  -9%

One would have to make up  +25%  gains on a stock that loses  -20%.  It's an uphill battle and the way to increase the size of portfolio is to mitigate the losses and conserve  CASH.  Personally I have been gradually reducing my positions as of 3 weeks ago and reduced the number of stock/etf's from 12 down to just 6.  

"Treat your stock positions as your employees.  You would fire the ones  that do not perform for you.  You will retain the ones that do perform for you."

It seems brutal but than again this is your hard earned money that you are putting at risk in the market.  The way to increase the size of your portfolio is to minimize losses and be out of the market when conditions are not favourable.  Aggressively pursue the market when IBD changes its tone of the market to  "Confirmed Uptrend".  You have to have the  CASH  available when the market conditions become favourable for you.

Happy Trading!

Amin (investorspotlight@gmail.com)

https://youtu.be/yNiWviKEoa8

Portfolio  Management 

"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 in June of 2020.  I shared this excellent content on my tweeter account:  "@spotlightamin"  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.

One of the best books that I personally keep a copy by my bedside table and the book that I carry with me every time I travel or go on vacation is:

How  to  make  Money  in  Stocks (4th Edition)

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

The first chapter from page 9 through page 109 are highlighted with charts of the the greatest winning stocks.  Every winning stock ever since the stock market came into being exhibit these characteristics.  There is no secret to picking the right winning stock if you learn to study the stock charts and all the hidden clues it exhibits.  Professional money managers don't want to share these secrets to individual retail traders and would much prefer that you buy what they have to sell - mutual funds and index funds.  Here is the link that describes the IBD (Investors Business Daily) system as practiced by its founder Mr. William J O'Neil.

https://youtu.be/66XFXqh_5N4

Currently 2 of my largest stock positions is in  $RH  (my blog post of Oct 22 2020)  and  $PYPL.  Both of these positions were originated during the  'Follow Thru'   day on April 6th ($PYPL at $97.80 that is  +300%  currently)  and on April 7th ($RH  at $110.56 that is  +600%  currently).  Multiple positions were established in a stair step manner as the stock kept climbing.  Both of these stocks have appeared numerous times in some of the most powerful screens of IBD weekly print and digital version since January 2019.  The key to making sizable gains in your portfolio is to concentrate your portfolio to just a handful of stocks.  It seems counterintuitive but when you put into practice the rules laid out by IBD, it makes perfect sense. 

Mentoring/Coaching  Program

I have had a lot of my readers express an interest in getting up to speed with learning about Growth Stock Investing and trading.  We will be offering for the first time ever live weekly Zoom sessions for 8 weeks in a row tentatively starting Tuesday  August 31st,  2021.  Sessions will be offered at 6.00 pm (Eastern Standard Time) that will last 60 to 70 minutes.  There will be home work assigned at the end of every session to help every participant put immediately into practice the discipline of Growth Stock investing.  I shall share my screens so that you can:

1. Look over my shoulder every week as I go through the process of looking for stocks of interest.

1. Analyzing the stock charts to decipher the institutional behaviour.

1.  Annotate stock charts on the brokerage platform for future reference.

1. Going through the Investors.com website to extract some fundamental and technical aspects of the stock.

1. Developing an appropriate Trade Plan for the stock.

1. How to position size when you take an initial stock position or add to the existing position.

It will be 2 month (8 sessions) subscription service with a blog post weekly to help keep the subscribers abreast of the stocks discussed and lessons to learn from the home work assignment.  After the first 4 sessions of learning some of the key parts of the Growth Stock investment strategy, subscribers will have the opportunity to present Growth Stocks of interest from their homework assignments every week that they would like for me to highlight during follow up sessions to solidify the rules of investing.
Class size will be limited to few students  to enhance the experience of active engagement with homework assignments.  Sessions will be recorded and archived  and will be made available as a reference guide.
if you would like to participate in this subscription service and start your profitable investing journey with my guidance and mentoring, contact me at:

investorspotlight@gmail.com

You must be a subscriber to IBD digital/print to attain the most benefit from this mentoring session.  It will require a couple of hours of study every week to solidify your learning of the principles of Growth Stock Investing.  November through April are the strongest months in the stock market.  Invest the time now to master this technique to attain financial freedom. 

Happy Trading!
Amin Hemani

Super   Stocks

Professional money managers that handle hedge funds, mutual funds and pension funds are the ones responsible for the rise in the price of a stock.  When they decide to take a position in a given stock, it usually takes them several weeks of consistent buying to accumulate the total position they are trying to attain.  It's very hard for them to hide their intentions.  Once you learn to decipher the daily, weekly and monthly stock charts of the stock, it becomes very apparent how some of these stocks attain gains of 400% to 2,000% within a few years.  

2015 was the year when market was going through a consolidation period.  Our new bull market began taking a hold by June of 2016.   $QQQ   the growth stock index I monitor is +350% since that time.  Some of the big cap growth stocks that we hear about that have out performed the  $QQQ  such as, $AAPL (+700%),  $AMZN (+500%), $CMG (+400%),  $GOOGL (+400%), $MSFT (+500%)  and  $NFLX (+500%), all started their huge run and displayed some of the very common characteristics of what I consider  SUPER STOCKS.  Some of the  common traits that I have noticed studying such stocks are: 

1. They are not cheap stocks when they start their initial run.  Institutions don't buy cheap stocks since they have to buy millions of shares to accumulate their full position.
2. These stocks quite often gap up in price because of the sheer demand from all the institutions that want to accumulate them.
3. You will often notice that the stock will attain gains of +20% or more within a week or three during earnings report and consolidate these gains before making another attempt to attain a higher price.

According to IBD (Investors Business Daily) principles of investing as preached by the founder of IBD  Mr. William J O'Neil, the way to make big money in the stock market is to concentrate your portfolio to a handful of stocks and not hold more than 8 to 10 stocks with a $million portfolio.  Every week end I look over one of my stock watch list that high lights stocks that have gapped up or are showing huge spikes in volume of shares changing hands during its initial run.  

Stock  Watch  List

Here is a list of stocks that the institutions have indicated an interest in during the last several months.  Some of them rose  +20%  or more within 3 weeks and triggered the "8 Week Hold Rule".  I have indicated in parenthesis support and resistance area that the stock may retrace to or build a base to propel higher.

1. $ASO    ...   (41.74)
2. $BEAM   ... (94.60)
3. $BNTX    ... (219.94)
4. $CELH   ...  (70.66)
5. $CERE    ... (18.14)
6. $CRNC    ... (120)
7. $CROX    ... (109.39)
8. $DECK     ... (353.70)
9. $FIGS       ... (42.89)
10. $GNRC    ... (363.57) Currently have several positions average position price $319.71
11. $IT            ... (235.55)
12. $NKE        ... (146.82)
13. $NTLA      ... (92.0)
14. $SWBI      ... (23.57)
15. $TDC        ... (47.68)
16. $TTD        ... (72.53)
17. $TIGR       ... (26.20)

We are heading into the worst performing 3rd quarter of the year.  As a general rule of thumb to follow with growth stocks, its always a good idea to trim your position once the stock makes a gain of +20 to 25%.  Within 2 weeks we will embark upon the earnings reports for the 2nd quarter.  Stocks become very volatile from earnings report and its a good idea to  trim some of your holdings to avoid a nasty surprise of a gap down in price.  Don't ever let a sizable profit to turn into a loss.  You have worked very hard to attain profits in a stock and the common mistake most traders make is holding onto the full position in a stock during earnings report.

Happy Trading!

Amin

 GROWTH  Stock  Investing

Lesson 1: Penny Stocks Will Ruin You

Yesterday I came across a post  that I thought was quite insightful and well written.  What really jumped out at me was the opinion of penny stocks because it's one that resonates with me.  There are lots of ways to make money investing but I am convinced that penny stocks will never get me to my financial goals.  I prefer to manage my risk by working only with true growth stocks.  The sooner you learn to steer clear of penny stocks the better as far as I'm concerned.  Personally I prefer to be involved with stocks that are priced above $40.  $100 or higher is preferable - especially with average daily trading volume of 500,000 shared per day or higher.  These are institutional types of stocks and I prefer to fish where the big boys in the market are fishing at.

Lesson 2: Know Your Trading 

Personality

In my role as a Meetup coordinator for IBD (Investors Business Daily) and as a mentor to new traders for the last 7 years, I am constantly exposed to people who employ all kinds of different investing methods.  For the last 25 years I've thought of myself as an investor but recently it occurred to me that I've actually become a trader.  If you're wondering what the difference is, it really boils down to your time frame. 

I simply don't have the stomach to sustain the types of double digit losses that investors might see over the life of their positions.  Also, I don't have the patience to sit in a position for more than 8 weeks at a time so long term involvement doesn't really interest me.  Knowing that, I've committed myself to planning all of my positions from the perspectives of a trader instead of as an investor.  However, if the stock makes a substantial gain (+20% to +25%) within 8 weeks, I will take partial profits and allow the rest of the position to consolidate and stair step additional when the stock moves to higher ground.

Lesson 3: Have A Process

My trading process has been methodically put together through years of classroom training as well as trial and error.  I am a Growth Stock trader and the core system I follow is the IBD style of investing in Growth Stocks.  Concentrate my portfolio to just a handful of stocks/etf's  and limit my exposure to no more than 12 to 15 stocks when the market has a  "Follow Thru Day."  Within a short period of time, I quickly identify the true market leaders that are out performing the general market.  Put more money to work to the ones that are helping me build my portfolio and trim back the ones that are not advancing as fast or worse - are losing money.  According to IBD, most retail traders with a portfolio size that is no more than a $million in size ought to have just 8 to 12 stocks.

No matter what process you decide to use, it's only going to work if you stick with it.  The moment you start to stray or take liberties, you've increased your risk along with your chances of losing money.

Lesson 4: Follow Rules

IBD has several Buy Rules and Sell Rules.  As a retail trader, it's critical to follow these rules because they are proven rules that Mr William J O'neil (Founder of Investors Business Daily) published in his book:

How to Make Money in Stocks

I keep a copy of his book in my office and by my bedside for a quick reference.

Infact I take this book with me when I travel or when I go on vacation or a cruise.

He wrote these rules to help him navigate the market and mitigate risk.  Master these proven rules and do not deviate from its true concept.  Mitigate risk by cutting losses to no more than 7% to 8% from its entry on every stock that you initiate a position on - no exceptions for someone starting out.  Most retail traders will never make much of a progress with their portfolio if they don't minimize their losses.  Psychologically it destroys your confidence everytime you open up your brokers platform and see that losing stock position stabbing at you. 

Happy Trading!

Amin Hemani (investorspotlight@gmail.com) 

 

Institution Stocks of Interest

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 stocks tend to gap up during the quarterly earnings report.  There is a rush from the institutions to capture as many shares as possible.  Their competing interest is reflected in the rise in the price of the stock.  During earnings season, every quarter I scan for stocks that increase in price in volume of shares traded 2 or more times than the average daily volume.  Institutions immediately within days hold back their interest after acquiring their initial position.  Retail traders often get excited and think that the stock will keep going higher and higher.  Other retail traders often get greedy and start chasing the stock only to find out that the stock begins to retrace down from the 8 day sma (simple average) to 21 day sma.  Patience is the key.  Make a list of such stocks that gap up and watch its performance over the next 8 weeks for a possible entry.

$QFIN

This stock has been appearing on IBD's one of the most powerful screens - IBD 50 Stock list - for the last couple of weeks.  It also has appeared regularly on the Sector Leaders Screen as well.  This  raises my rabbit ears for clues of institutional interest in the stock.  Here is a quick recap of how one could have taken advantage of the clues left by the institutions exhibiting an interest in accumulating this stock. 

• Feb 1st of 2021, stock broke out from 18.38 buy point in volume of shares traded 3 times the daily average volume.  Within 6 days, the stock rose more than  +20%  and within 2 weeks the stock attained gains of  +71.38%.  This triggered the  '8 week Hole Rule'.  Stock never looked back for the next 8 weeks 
• One of the IBD sell rules is to lock in some partial profits once the stock attains gains of  +20%  to  +25%.  Stocks quite often take some time to digest the massive gains attained in a short period of time.  It's good that the stock builds another base from which to propel higher.  This provides one an opportunity to profit in the stock if one missed getting in on Feb 1st.
• Earnings was on May 27th.  Stock once again broke out at 28.51 the day after the earnings release in trading volume that was 5 times the normal average trading volume.  Once again the institutions have expressed an interest in acquiring the stock and scaling up their position in the stock.
• May 28th the next day, stock could have been purchased at its early buy point of 28.51.  
• Friday June 4th, the stock broke out from its traditional buy point of 35.25 in volume that was 3 times the daily average trading volume.
• Within one week, the stock has attained gains of  +28.27%.  
• Stock is currently extended and trading at its 8 day ema (exponential moving average).  It's would be quite normal for it to retrace closer to the 21 day sma  to provide one an entry closer to the break out buy point.
• Stock is  +100%  since its breakout on Feb 1st (4 months).

 Subscription Service

We are putting our final touch to launch our Weekly Zoom Sessions.  If it all works out well than we hope to have it start by late summer.  August and September are our worst performing months.  It makes perfect sense to get trained to the finer points of trading and investing in Growth Stocks while the market is in doldrum for the summer.  I am looking forward to have you all:

1. Look over my shoulder every week as I go through the process of looking for stocks of interest.
2. Analyzing the stock charts to decipher the institutional behaviour.
3. How to Annotate stock charts on the brokerage platform for future reference.
4. Going through the Investors.com website to extract some fundamental and technical aspects of the stock.
5. Developing an appropriate Trade Plan for the stock.
6. How to position size when you take an initial stock position or add to the existing position.
7. Look over some of the conservative option setup to consider to either protect your stock or to increase the profitability for slight moves in the stock.

Class size will be limited to few students  to enhance the experience of active engagement with homework assignments.  Secure your spot now by letting me know if you are interested in being a subscriber.   Sessions will be recorded and archived  and will be available for as long as you are a subscriber.   

Send me an email at: 

investorspotlight@gmail.com 

if you would like to participate in this subscription service and start your profitable investing journey with my guidance and mentoring.

Happy Trading!

Amin Hemani