MARKET UPDATE #152
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 ,
never expect that there is only one direction in the markets. Although we are in a new uptrend, the markets will pull back, some stocks will have corrections and other will explode the upside. It's now your job as a trader to cut your losers short and let the winners run. Be patient, you never know how long a trend will last.
You must avoid to micro manage your winners. Losers must be cut short, but winners need room. They are the trading poscitions which will be responsible for your yearly profits. Always remember that true market leaders can run weeks or even months before developing a top.
Here is what you will find in this newsletter:
- Questions and answers from the subscribers forum
- Comment on the current market situation: Markets need a short break
- Stocks I am watching at the moment: $COIN, $DDOG, $SOFI
- Trading tips: Avoid to micro manage your winners
If you have questions, please use the subscribers forum.
Thank you and good trading,
Julian
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QUESTION AND ANSWERS
No new question or answer this week. You have to register for the forum! If you have an account, you have to login.
Do you have a question for me? Use the free forum. Links are below!
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MARKET CONDITIONS
Markets need a short break
The NASDAQ went up 7.8% from the low and the S&P 500 printed a new all-time high! It's clear that the markets need a small break before they can move higher. In addition a lot of stocks are extended too and need to consolidate. That gives us the benefit to see which stocks will be true market leaders and which not!
Stocks which start to correct and show weakness must be sold and new emerging leaders must be bought. That's the job of a medium term trader. When the markets starts to consolidate or correct, I always observe my stocks very closely. They give me all the information I need to see if I should hold or sell a stock. |
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NASDAQ composite: The trend is up. It does not matter if the NASDAQ will pull back to the EMA 21 or consolidate above, the probabilities for a continuation of the uptrend are higher. |
3 LEADING STOCKS
This week I have 30 stocks on my watchlist, 7 more as last week.
Would you like to learn how to find stocks like below? Look into my video course Growth Traders Toolbox. |
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$COIN: Crypto stocks are much weaker than crypto currencies. Market participants wants the original and not companies which have higher costs and a very unstable business. However, maybe crypto brokers are working? We will see.
In my opinion, $COIN could be what ICE, CBOE, NYSE or NASDAQ are to commodities and stocks: An accepted marketplace for trading crypto currencies. It's too early, but that could a be possible future scenario.
The stock is still very weak and has a lot of overhead resistance, but I am watching it closely to see if the demand for the stock continues or not.
Sales growth in the last 3 quarters: 495%, 845%, >999%. EPS growth in the last 3 quarters: 723%, >999%, >999%. EPS estimates: 656% for 2021 and -46% for 2022.
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$DDOG: I highlighted the stocks many times in my free newsletter. The recent weeks have been very tricky, because the stock consolidated upwards. It's very strong and extended, but keep the stock on your watchlist.
The company provides software for datacenter operations and automatization and also expand into the cyber security market. Sister stocks are very strong too which gives me a lot of confidence.
Sales growth in the last 3 quarters: 56%, 51%, 67%. EPS growth in the last 3 quarters: 100%, 0%, 80%. EPS estimates: 27% for 2021 and 43% for 2022.
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$SOFI: I did not so much research about the company and stock yet. The company provides financial services in a lot of areas: Loans, investment, insurance, credit cards. The target group are young, independent thinking people. The company perfectly fits into the current big theme of fintech and innovative companies, driven by technology, in the finance sector.
Although the trading volume is very high, the company still have not so much support from institutions. Maybe that's the reason why the stock went sideways for months now and is still very volatile.
Sales growth in the last 2 quarters: 80%, 64%. No positive EPS or EPS estimates.
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TRADING TIPS
Avoid to micro manage your winners
A lot of traders, me included, have a problem: They tend to micro manage their positions. Instead of letting profits run and sit tight, they tend to take some profits, add to the position again, take more profits, add again … They are always busy and work hard instead of sit and do nothing.
I think it is ok to micro manage losing trades (cutting, cutting more and closing out the rest) but you must avoid to micro manage your winners! If you micro manage your winners you will get mediocre results, because you choke off your winners slowly. It is much better to let the winners do their thing and follow your rules. They will show you when it's time to take profits!
What do I do when I catch myself micro managing my winners? Simple: I do something else! Every traders needs a hobby, business, job or other activities besides trading. As a trader you are not paid by the hours you are working or the number of tasks you finished – you are paid by doing nothing! That's really important to understand, especially as a medium term trader. Letting profits run and cutting losses short is our job! |
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