MARKET UPDATE #78

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 ,

same story every week: Strong market, many leading stocks in strong uptrends! What else should I write? There are not so many strong markets like this one in history. If you have sound stock selection, entry and exit rules, you should profit largely from this opportunity.

The question is: When is the right time to take profits? The answer is not so easy. You should track your stocks carefully and have an eye on your watchlist, the indices and leading stocks. When the market turns around, you will see that the stocks change their character.

Here is what you will find in this newsletter:

Questions and answers from the subscribers forum
Comment on the current market situation: Look for signs of exhaustion
Stocks I am watching at the moment: $BJ, $MKTX, $SPOT
Mindset tips: Beliefs about trading

If you have questions, please use the subscribers forum.

Thank you and good trading,
Julian

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QUESTION AND ANSWERS

2 new question:

1. Increase my position to full position
2. Guidelines on using the 50 and 200 moving averages

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

Visit the forum

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MARKET CONDITIONS

Look for signs of exhaustion

Strong markets like these often ends in exhaustion runs. Many institutions underestimated the turnaround in the stock markets and have to increase their exposure in a short time. That type of rally is called "lock out rally".

We saw an exhaustion rally before the correction end of 2019/beginning of 2020. Many leading names showed blow-off tops and their rallies ended. The NASDAQ was more than 15% above its moving average 200. I think that we will see similar conditions soon.

I recommend to watch my YouTube video about 3 selling techniques: https://youtu.be/xwqoZvjNjEk

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$TSLA blow-off top in 2020: Leading stocks often build a top before the market. Look for signs of exhaustion or blow-off tops in leading names. That will help you to see if the market is ripe for a correction.

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NASDAQ and distance from 200 MA: If the NASDAQ is >13% away from its 200 MA, I call that an exhaustion rally. Before the correction started, the NASDAQ was 15% away from its 200 MA.

There are very few times in history when the NASDAQ rallies more than 13% from its moving average 200 without any serious correction.

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3 LEADING STOCKS

I added a bulk of names to my watchlist. I did it to monitor the behavior in the leading names and look for pullbacks.

This week I have 46 stocks on my watchlist, 10 more (!) as last week.

$BJ - There was a battle between multiple stocks in the retail sector. Which one is the leader? Maybe it's decided now. $BJ is a young, fresh IPO stock. It exploded after a great earnings report and showed extreme accumulation. That's often a sign that institutions are surprised and hadn't the stock on their buy list. Now they are buying aggressively into the new leader.

The stock is already broken out. Maybe there is a pullback opportunity soon.

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$MKTX – Leading bonds and credit exchange platform sounds boring? But this stock was a strong leader in 2019. Sales grew 36% in the last quarter. EPS grew 41%. Relative strength is great and the stock pulled back to its EMA 21 for the first time. Maybe the stock can continue its uptrend soon.

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$SPOT: Only because you use the product, it must not be a great investment or trade. $SPOT corrected strongly after the overhyped IPO. Now after it built a bottom, it shot up strongly. The fundamentals are still mediocre, but leading funds took a position in $SPOT. Maybe they see some additional growth or potential in the coming years. However, I recognized the strong volume and price action and added that stock to my watchlist last week. Maybe it can consolidation around its all-time high.

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MINDSET TIPS

Beliefs about trading

I regularly stumble into discussion on social media about beliefs. I think that beliefs are very important in trading. You do what you think! They create your mindset. You must decide which beliefs are helpful and which not. I created a video about that for you.

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