MARKET UPDATE #83

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 leading stocks are running very hot. If you are invested in one of them, I hope you have the right exit strategy to keep the most of your profits!

If you look at the indices in comparison to many leading stocks, it's obvious that they are decoupled completely. That's often a sign that money is rushing into the leading stocks while the rest of the stocks are going down or sideway. This situation must be observed carefully.

Here is what you will find in this newsletter:

Questions and answers from the subscribers forum
Comment on the current market situation: Dangerous mix in the stock market
Stocks I am watching at the moment: $FIVN, $AGI, $TREX
Trading tips: 8 Keys to Superperformance with Mark Minervini and David Ryan

If you have questions, please use the subscribers forum.

Thank you and good trading,
Julian

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QUESTION AND ANSWERS

6 new questions or answers:
1) Trading US stocks and currency risk
2) Stop loss intraday vs. end of day
3) Minimum time per day to trade successfully
4) Leverages ETF’s
5) Advice to help me with trading stocks
6) Questions about breakouts

Do you have a question for me? Use the free forum. Links are below!

Visit the forum

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MARKET CONDITIONS

Dangerous mix in the stock market

As I wrote in the introduction, it's a very dangerous mix of exhaustion in leading stocks and decoupled indices. Is this the end-of-rally run? Maybe.

If you trade stocks, don't let the indices influence your exits. Ride the stock until it shows clear technical signs of selling pressure of exhaustion:
– Reversals on high volume
– >70% above it's moving average 200
– New highs on low volume
– Broke of the EMA 8 or EMA 21

There is nothing wrong to sell i.e. 50% of your position to take the profits and let the rest run until the EMA 21 is broken. The most important thing in exhaustion runs is to keep the profits and don't let the profits slip away in a sharp pullback.

I am observing the indices and leading stocks closely. I see that other stocks are setting up very nicely. They don't belong to the hot groups, but sector rotation is one of the principles in a bull market. Money is flowing from one sector to another and new leaders are created over time.

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Biotech sector is taking over leadership: This is a typical sign of sector rotation. The biotech sector consolidated a couple of weeks and broke out to new highs while the indices are going down or sideways. If I see many biotech stocks in my screeners, I know that this sector is on the move.

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3 LEADING STOCKS

I extended my watchlist further to monitor the breath of the market. I added multiple stocks from the gold and biotech sector. As soon as I see which ones are the leader, I remove the rest and only monitor the leader closely.

This week I have 86 stocks on my watchlist, 25 more as last week.

$FIVN: I see many communication software names in my watchlist and screeners. $FIVN is only one of them. They are all basing very nicely and are close to their breakout levels.

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$AGI: Gold stocks is another sector which is looking very good. There are many names close to their highs. $AGI is one of the leader in this sector. I personally would only look for names which are close to their highs and ignore the rest.

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$TREX: That's a stock from a sector I normally don't monitor. But it's consolidating very nicely around the EMA 21 and looks like it wants to move higher.

The company is engaged in the wood industry and provides decks and outdoor articles. Think about that: If everyone is at home and a lot of people have a garden, what are they doing? They spend money on outdoor and gardening article. So $TREX could profit from the Covid-19 situation. That's why the stock is under accumulation like many other home improvement stocks.

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TRADING TIPS

8 Keys to Superperformance with Mark Minervini and David Ryan

I want to share this video from Mark Minervini and David Ryan with you. It gives you insight into the trading from Mark and David I never saw in other videos. So it's highly recommended to watch it.

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