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JS-Masterclass #6: The Perfect Buy PointThe Perfect Buy Point A Perfect Buy Point represents the completion of a stock’s consolidation and the potential start of its next advance. After a base pattern has been established, the Perfect Buy Point is where the stock establishes a price level that will act as the trigger to enter a trade. When a stock’s price level moves through the Perfect Buy Point, there is a high probability that this represents the start of the next advancing phase. You can also call the Perfect Buy Point a “call to action” price level – it is the optimal buy point. In the context of a stock’s Volatility Contraction Pattern, a temporary pause (also called a base building process) allows you to set a buy stop to enter a trade. You want to buy as close to thePerfect Buy Point as possible without chasing the stock up more than 1.0%. In this context, the use of buy stop limit orders is recommended. As a solid consolidation process and the formation of a Volatility Contraction Pattern are needed before a Perfect Buy Point can occur, The Perfect Buy Point can also be considered as the line of least resistance. A stock can move very fast once it crosses this threshold. When a stock breaks through the line of least resistance, the probability is high that the price level will move much higher in a short period of time. This is the case because this represents an area where supply is low. Therefore, even a small amount of demand can move the stock higher. The importance of the Volume at the perfect Buy Point A Volatility Contraction Pattern is needed before a Perfect Buy Point can develop. As explained earlier, supply will stop coming to market at the ed of a valid Volatility Contraction Pattern. This is why we want to see the Volume significantly come down in the day or the couple of days before the Perfect Buy Point develops. Now, with only very little supply of stock in the market from sellers, even a small amount of buying can move the price up very rapidly as the price level moves through the Perfect Buy Point. In the ideal case, this move through the perfect Buy Point occurs under heavily increasing volume. This might be an indication that big institutions are putting their big money into the stock. When all of this comes together, you want to place the order as close to the Perfect Buy Point as possible. Always wait for the price level to move through the Perfect buy Point! Some traders will try to get in before the breach of the pivot point to save a few pennies on the trade. Assuming that a stock will break out is dangerous and the breakout may fail. Be patient! Remember Even if you respect all these technical requirements of a Perfect Buy Point, you will still get stopped out and incur losses. BUT: Trading is all about probabilities…respecting these rules will increase your probability to enter profitable trades and significantly outperform other traders and increase your chances to be consistently profitable in the market.
Education
by JS_TechTrading
2
US TOP-Stocks: Watchlist Oct 28General Market Update Tech Stocks Continue To Slide After Meta Meltdown The stock market ended sharply mixed Thursday, as the Dow Jones Industrial Average finished with moderate gains. The tech-heavy Nasdaq composite sold off, as tech giant Meta Platforms (META) crumbled on weaker-than-expected earnings results. Amazon (AMZN) and Apple (AAPL) reported earnings late Thursday. Amazon shares dived almost 20% in extended trade, while Apple stock fell about 1%. Nasdaq 100 futures were sharply lower in response. Stock Market Rally Struggles After two straight days of heavy selling on the Nasdaq, the young stock market uptrend is clearly struggling to gain traction. The market is still in a confirmed uptrend, so investors have the green light to buy strong breakouts. However, given the precarious action seen in recent sessions, and after a few failed follow-through days earlier this year, it's logical to keep exposure limited to 20% to 40% of a portfolio until the overall stock market environment improves. We continue to track companies that handily beat earnings results and have strong upside reactions and could be the leader of the next bull market. Updated Watchlist All stocks on our watchlists meet the hard selection criteria according to Mark Minervini's Trend-Template and William o' Neil's CAN SLIM methodology. Here is the link to the updated watchlist: www.tradingview.com
Long
by JS_TechTrading
JS-Masterclass #3: FundamentalsIn the recent tutorial 'Trading with the Trend - Stage Analysis', we have explained the importance of identifying stocks in a confirmed stage 2 uptrend using the 'Trend-Template'. What are the Fundamentals doing in a confirmed stage 2 Uptrend? The best stocks and buying opportunities available in the market meet the technical requirements according to Minervini's Trend-Template and have very healthy Fundamentals. Best Candidates - Growth - Accelerating EPS and Revenues - Explosive Market Position - Sustainable Trends - Scalable Business Model Worst Candidates - Capital Intensive - Limited Pricing Power - Heavily Regulated - Margin Pressure - Eroding Industry Position Watch out for these 3 key fundamentals – Earnings, Sales and Margins 1) Earnings in most recent 2-3 quarters +20% or more – the bigger the better; look for earnings acceleration – quarter to quarter sequential. Look at a 2 quarter average (up 20%) 2) Sales acceleration: sales increasing in most recent 2-3 quarters 3) Check profit margins – are they expanding or contracting? 4) Combination of sales and margins = earnings: gauge current growth versus 3-5 year growth rate (look for acceleration), Look for a breakout year How Do You Know if an Earnings Report is Really Great? 1. Results are better than the consensus of analysts’ estimates or, even better, earnings come in above the highest analyst estimate. Why? This will get the stock on the radar screens of big institutions. 2. The company raises its guidance for the upcoming quarter and the fiscal year significantly. 3. The stock price reacts positively to the earnings report and/or company issued guidance and resists meaningful profit taking over a number of days or weeks. 4. Analysts promptly raise estimates. (More than a 5% change from 30-days earlier is meaningful). 5. Revenue is reported above the consensus estimate (preferably above the highest estimate) and is also revised upward. 6. Earnings are “quality” – profit improvement comes from increased sales as opposed to a one-time gain or non-operating/non-recurring income. Keep in mind, cost cutting or “productivity enhancements” have a limited life span. 7. You can check Return on Equity to get an idea how good management is doing. You should compare this number to other companies in the same industry. 15-17% is a good cutoff for most stocks. Red Flags • Material earnings deceleration is a warning • Eroding margins is a warning • Positive earnings with negative sales – limited life span • A company showing strong earnings but not paying much in taxes is a red flag Even if you have found a stock with great Fundamentals: - Never trust the story - Never trust the numbers - Unless confirmed by price action
Education
by JS_TechTrading
4
Trading with the Trend - Stage AnalysisThe trend is your friend. This is a very old but true quote. Why is that? • 98% of big winning stock made the largest portion in their gain in a Stage 2 uptrend • Evidence that institutions are buying • Increase probability of success • Know what to expect under specific conditions – point of reference Your goal is not to buy at the lowest price – It’s to buy at the right price! Every stock goes through the same stock maturation cycle - it starts at stage 1 and ends at stage 4 as shown in the chart. Stage One – Neglect Phase – Consolidation Stage Two – Advancing Phase – Accumulation Stage Three – Topping Phase – Distribution Stage Four – Declining Phase – Capitulation Our JS-TechTrading strategy focuses on identifying stocks in stage 2 uptrends. By doing that, we create an edge over long-term investors and less proficient traders. By focusing on stocks in a stage 2 uptrend, we avoid losing money or breaking even over a long period of time and we are fully invested when stocks are in their stage 2 uptrends so that we can accumulate money within the shortest period of time.
Education
by JS_TechTrading
US TOP-Stocks: WatchlistGeneral Market Update The stock market uptrend continued to gain traction Tuesday as major stock indexes notched their third-straight bullish session. The Nasdaq composite rose above the 11,000 level with ease, ending with a gain of 2.2%. Nasdaq volume rose, completing a second follow-through day for the index. Advancing stocks outnumbered decliners on the Nasdaq by nearly 4-to-1. The strongest outperformance came from small cap and midcap stocks. The iShares Russell 2000 ETF (IWM) ramped higher by 2.7%, helped by strong earnings reports and huge gains for Medpace (MEDP) and Calix (CALX). The small-cap ETF briefly crossed above its 50-day moving average but ended just below the line. The SPDR S&P MidCap 400 ETF (MDY) jumped 2.5% and closed just above its 50-day line. The S&P 500 marched ahead 1.6%, bringing its three-session gain to 5.2%. Preliminary data showed volume very close to Monday's level. The S&P 500 is getting closer to a rendezvous with its 50-day line, a potential resistance level to watch. If the index pauses and consolidates below this level for a short time, it wouldn't be such a bad thing. Price action like this could pave the way for a convincing retaking of the line. NYSE advancers beat decliners by just over 5-to-1. The number of technical breakouts and bullish setups has been rising, helped by a market tide that is flowing positive once again. Increasing market exposure is fine, but pay attention to the ticker tape's feedback when it comes to new buys. Are they making progress past proper entries? If so, that should make you feel good about increasing exposure. Updated Watchlist All stocks on our watchlists meet the hard selection criteria according to Mark Minervini's Trend-Template and William o' Neil's CAN SLIM methodology. Here is the link to the updated watchlist: www.tradingview.com
Long
by JS_TechTrading
5
Buying before the breakout : Pocket PivotABC is a company with good accelarated Earnings and good margins. The company is identified as tradeable via fundamental analysis/funadmental screening. Now whats left is when to get it. I wait for the price to break the 100-200 ema ribbon and make some kind of base/price structure around the area and see if there is a pocket pivot around/inside the base. Preferably before a breakout of the base (if a breakout candle coincide with a pocket pivot, thats okay too)
ALong
by sufiansaid
US TOP-Stocks: WatchlistGeneral Market Update After the Nasdaq composite and S&P 500 made follow-through rally confirmations Friday, the stock market extended gains Monday. In the initial hours, performance was uneven. The Nasdaq composite and small caps lagged the S&P 500 and Dow Jones Industrial Average. But the Nasdaq composed itself in afternoon trading and closed almost 0.9% higher. The S&P 500 and Dow led with gains of 1.2% and 1.3%. The Russell 2000 rose less than 0.4% as small caps never caught up with the rest of the market. Volume rose 2% vs. Friday's session on the Nasdaq and was indicated lower on the NYSE. Friday's follow-through — when the S&P and Nasdaq surged more than 2% each in higher volume — marked the start of a confirmed market uptrend. But while the signal is historically bullish, today's market calls for greater safeguards. Reasons For Stock Market Caution Three follow-throughs that occurred earlier this year all failed, as they often do in bear markets. And today's stock market still faces major risks. The Fed, for one, is still looking for clear signs that inflation is cooling off before it cuts back on rate hikes. Scores of earnings reports are coming out this week, including many bellwether companies. Updated Watchlist All stocks on our watchlists meet the hard selection criteria according to Mark Minervini's Trend-Template and William o' Neil's CAN SLIM methodology. Here is the link to the updated watchlist: www.tradingview.com
BLACKBULL:SPX500Long
by JS_TechTrading
DKS Breakout Long TradeDicks Sporting Goods (DKS) is breaking out from a textbook cup with handle pattern. After nearly doubling in price between May and August, the stock stalled and formed a small pivot at the $115 resistance level. Relative strength has been climbing for several months - a sign that Dicks has been leading the surge higher and outperforming the rest of the market. Even in the late August market selloff, DKS held its ground and posted higher RS readings. I’m looking for a continuation of the breakout that began on Friday.
NYSE:DKSLong
by rossgivens
1
Breakout Trade in CSIQCSIQ is a market leader in today’s #1 sector - solar energy. Shares soared over 60% between July and August as solar stocks came front and center as a leading theme in the market recovery. The 200-day moving average has begun sloping upward, putting CSIQ at the beginning of a new Stage 2 uptrend (see my previous post on the 4 Stages of the Stock Cycle). The pink dots on the relative strength line on top of the chart signal new RS highs being made by CSIQ. In other words, the stock has held up better than the general market over the last couple weeks. I’d like to see Tuesday’s action stay inside of Friday’s range to post a true inside day. If that happens, I will look to buy on a breakout above the Friday candle at 46.25.
NASDAQ:CSIQLong
by rossgivens
Where I'm Buying CPRXCatalyst Pharma (CPRX) is an absolute monster. Not only is the company posting huge sales and earnings growth in a sector that rarely has either, the stock has more than doubled over the last few months. There are 801 stocks in the biotech group tracked by Investors Business Daily, and CPRX ranks at the very top (see image in chart). After such a large advance higher, we must remain cautious to the possibility of a retracement. So we need to see signs of additional strength to trigger an entry. I’m watching for a move above last week’s high for my buy signal. This way, I can place a stop below last week’s low and still get away with a risk of 8% or less on the trade.
NASDAQ:CPRXLong
by rossgivens
NBIX Breakout TradeNBIX is in the biotech sector which I have been highlighting for several months as one of the strongest areas in the market. After emerging from a textbook breakout pattern in early August, shares have consolidated in a tight handle formation. If you look at the relative strength line at the top of the chart, you will notice three pink dots over the last several days. These show the RS line making new highs. Although the stock drifted sideways, the rest of the market has been in an ugly correction, so NBIX is actually holding up better than most other names. I'm looking for a breakout on volume above its down sloping trendline.
NASDAQ:NBIXLong
by rossgivens
Anatomy of a Breakout TradeThis is the anatomy of a breakout trade. First, you want to see a large advance in the stock. At a minimum, price should be at least 30% above its 52-week low. Stock will often be up several hundred percent before forming this pattern. Next, you want to see a series of pullbacks - each with a shallower depth than the last. Mark Minervini refers to this as a volatility compression pattern or "VCP". This pattern is a visual representation of the supply/demand dynamic playing out. There is supply, i.e. sellers, near the $33 level. Each time the stock reaches that level, selling pressure sends the stock lower. However, as those sell orders are worked through, each pullback should be shallower than the last - a sign that there are now fewer sellers. The stock is being transferred from weak hands to strong handed buyers. Ideally, you want to see the final pullback in the single-digit range. Look for signs of institutional accumulation during this pattern. These are large green volume candles showing heavy buying by large funds. I also like to see volume dry up in the final days leading up to the breakout. This is further confirmation that sellers are gone and the stock is becoming harder to buy. With little supply, any increase in demand, i.e. buying, will easily propel the stock higher. Finally, you want to buy the moment the stock clears resistance. If there is not a clear resistance level like on this chart of CCB, use the high of the most recent pullback as your breakout point. This is where you want to buy. Place a stop beneath the last swing low (the low of the last pullback). If done properly, you should never need to risk more than 10%. Although not necessary for a successful trade, high volume on the day of the breakout and during additional up days soon after the breakout will greatly increase the odds of a profitable trade.
NASDAQ:CCBEducation
by rossgivens
4