FREE MARKET UPDATE #190

Free weekly stock market education service with 3 stock ideas.

Disclaimer: The content is for educational purpose only. No investment advice. Please read the full disclaimer.

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Hi !

the stock market works on a short-term bottom. There is no strong follow-through or momentum yet. The market maybe needs to go sideways and trap more people before it can move higher. This is a very difficult market environment, because new leaders are already moving higher.

There is no reason to jump into the stock market with both feet. Give the market all the time it needs to build a clear bottom and give the leaders all the time they need to finish their bases or turn into a new uptrend.

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Here is the content of the weekly free newsletter:

Comment on the current market situation
Stocks I am watching at the moment: $LNTH, $CELH, $BYDDF.
Trading tips: Test the market with controlled risk and try to find out if this is a bottom or not

Thank you and good trading,
Julian

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MARKET CONDITIONS

Is this a short-term bottom? You only know this in hindsight. But as I discussed in the Premium Service, there are a few signs that this could be a short-term bottom:

1. Leaders are already moving higher.
2. Market shook off bad news regarding inflation.
3. Market moves sideways for a couple of weeks now.
4. Volatility contraction and clear support level in the indices.

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NASDAQ Composite (daily chart): There is a chance that we will see a rally if the NASDAQ can break out of the pattern. If it stays inside the pattern or has failed breakouts, be prepared for another correction.

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3 LEADING STOCKS

This week I have 26 stocks on my watchlist, 1 more as last week. I have a couple of leaders on the list which already move higher.

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All weekly charts below 👇

$LNTH: The medical stock consolidated very nicely for some weeks now. I personally like the strong EPS estimates and acceleration in sales / EPS. It's not clear if the stock needs more time here or will move higher quickly.

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$CELH: One of the clear leaders which I highlighted multiple times in the Premium community. There are rumors that Pepsi maybe is interested to buy the company to get some share of the energy drink market.

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$BYDDF: Huge shake out in the leading electric vehicles & solar battery company. They now sell more cars than Tesla. Last week there was a rumor that Buffett wants to sell his shares, but it looks more like a big shake out before the stock can move higher. I like the nice EPS estimates.

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TRADING TIPS

Test the market with controlled risk and try to find out if this is a bottom or not

I repeat two things the Premium community over and over again:

1. You don't have to jump into the market with both feet. Buy 2-4 test positions with a small position size (3-5%) and a normal stop (5-7%).

2. You have to risk money to test out if this is a bottom or not. There is no way to know it in advanced. Like a casino player, you have to make a bet. But as a trader you can define the risk in advanced … the cost to get the information if it is a bottom or not.

As soon as you have the information, you can either increase your position size or sell out the stocks (if it was not the bottom). The is nothing wrong with going to cash and buying back the same test positions a couple of days later if you have new information.

Do not focus on marking money, focus on risk management and the information you want to get from the market. You don't want to make a lot of money in that situation, you want to find out if this is a bottom and maybe the start of a market where you can make money. This is a big difference!

Maybe you think that you could wait until you get a clear signal from the market and you are right. But the problem is that you will miss the first leaders and have to buy them at much higher prices later. Buying stocks on higher prices and adding to them is much more difficult. That's why it makes sense to have some test positions in the early leaders.

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