MARKET UPDATE #146

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 ,

in the last issue I warned you that the strong upmove of the NASDAQ could be a short-term bull-trap and lead to a pullback. That's exactly what we saw last week. It did not surprised me because so many stocks were short-term extended and need a pause.

Next week will be interesting for crypto currencies too: Ethereum and Bitcoin pulled back sharply. Even though this is normal for those markets, it could be the start of a serious corrected. I observe that very closely, because there is a lot of speculative money in that market and that give us clues about the risk appetite of institutions.

Here is what you will find in this newsletter:

  • Questions and answers from the subscribers forum
  • Comment on the current market situation: Pullback could lead to another window of opportunity
  • Stocks I am watching at the moment: $AFRM, $DASH, $RBLX.
  • Trading tips: Be patient and use the benefit of the weekly chart

If you have questions, please use the subscribers forum.

Thank you and good trading,
Julian

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QUESTION AND ANSWERS

1 new question or answer this week. You have to register for the forum! If you have an account, you have to login.

1) “Weekly unusual volume” shows large number of stocks

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

Visit the forum
Register for free
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MARKET CONDITIONS

Pullback could lead to another window of opportunity

Always when the market pulled back, you want to monitor the stocks closely. Stocks which show relative strength and resist the pullback should be on top of your list. Stocks which starts to act weak and maybe corrected deeper as the market, should be on your sell list.

As the market started to go sideways around the resistance, I shorted the NASDAQ 100 (via selling futures). It's not the optimal hedge but I wanted to protect my stocks a little bit. In addition I took some profits in very extended stocks and reduced the size of weak positions. These are the normal portfolio management todos for a trader. As soon as the market starts to move up again, I will add to the stronger stocks again and give them all the freedom they need to produce profits.

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ndx-2

NASDAQ composite: The next support levels are around the EMA 21. I personally would welcome a deeper correction to the support level around 14,800-14,900, because it would give the index more room to the upside. The odds for a stronger correction to the support trendline are low.

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3 LEADING STOCKS

This week I have 42 stocks on my watchlist, 9 more than last week. The number of stocks on my watchlist shows me that there are a lot of potential trading candidates. The market environment improves in the last weeks.

afrm

$AFRM: That stock could be the next super leader with institutional quality. The driver behind the strong upmove is the cooperation with Amazon. It reminds me about Shopify in 2017 before it started the monster uptrend. The catalyst at that time was a cooperation with Amazon too.

$AFRM is absolutely over-extended and needs a consolidation. Everybody who wants to buy the stock already bought now and I am sure that institutions now want to see a confirmation of the success of the Amazon cooperation. They maybe wait until the next earnings report or any news about the cooperation before they continue their buying. But of course, that's only my opinion. The market can have a different opinion and the stock will move up sharply. Watch the price action closely!

Sales growth in the last 3 quarters: 57%, 67%, 71%. No positive EPS or EPS estimate.

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dash

$DASH: I did more research about $DASH and wanted to know why institutions are buying the stock. I think the restaurant delivery service is not so interesting, but they see themselves as a last-mile delivery expert and that's interesting. They are expanding in other areas like food delivery or other retail sectors. That's a huge opportunity! The first company which is able to create a powerful last-mile delivery service for local businesses will have a huge potential. Amazon is not able to do that and follows a different strategy. But you can see same approaches in China and they are very, very successful. That's why I am interested in $DASH.

Sales growth in the last 3 quarters: 226%, 198%, 83%. No EPS growth or estimates.

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rblx

$RBLX: I watch this gaming stocks for a while now and traded the first upmove in May successfully. Although everybody is excited about the stock because of the metaverse & crypto background, I have doubts if there is enough demand from institutions to push the prices higher. The market cap is already $50 billion which is very high in my opinion, but the company is still growing very fast. We will see if the stock can break out or not. I want to see a huge volume on the breakout to have a clear sign that the demand is high enough.

Sales growth in the last 3 quarters: 110%, 140%, 127%. EPS growth in the last 2 quarters: 920%, -84%. No positive EPS estimate.

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TRADING VIDEO

The best trading quotes from Paul Tudor Jones about Risk Management and Mindset.

Paul Tudor Jones is always an inspiration when it comes to risk management in trading. I produced a video for you with the best quotes from him and I share my thoughts with you.

Link to the video: The best trading quotes from Paul Tudor Jones about Risk Management and Mindset.

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