As a student of market history, I know that many events repeat. I also know that bull markets last much longer than bear markets and that they are driven by the huge volume of Institutional buying. And it’s always a good sign for the Bull market when the big cap, “growth” stocks lead the way. The best demonstration of that may be Amazon which had another big run from $833 to $923, a whopping $90 move! Amazon, Tesla,
Here’s my favorite swing trading stock – AMZN
Here’s another of my favorites – TSLA. And this stock is worth watching for another move up. It continues to follow the 10 dma which is a healthy sign.
Here’s another one – NFLX. This stock should make a move out of the consolidation pattern in the near future.
Here’s another one – FB.
Let’s take a look at the leading sector of this bull market. It’s still Technology, and we can see back in January of this year that while the market went sideways, the Tech stocks continued. The recent consolidation has resulted in a trading range that has held up better than the SP-500. A good sign of higher prices to come.
Back on April 2nd, our SOC Newsletter stated: “My
Looking at the Nasdaq, we can see that this market is being driven by the “growth stocks” and we are once again at ATH levels. This 3rd attempt will likely be the one that pushes us to new ATH’s again, and as Bill O’Neil says, the third time is a charm. So while the media wants you to think that all
Google – GOOGL had a nice run last week and continues to show us that the world all “googles” whatever they want to look up, giving the company a monopoly on searches.
Apple – AAPL is showing a declining volume pattern (DVP) as it continues to trade sideways. Watch for Apple to make a move this week or next.
Chipotle – CMG: So in these SOC Newsletters I could show you lots and lots of new IPO’s and other stocks to dazzle you with
Remember what Jesse Livermore says: “The only leading indicator that matters is to watch what the market leaders do, the stocks that have led the charge upward in a bull market. That is where the action is and where the money is to be made. As the leaders go, so goes the entire market. If you cannot make money in the leaders, you are not going to make money in the stock market. Watching the leaders keeps your universe of stocks limited, focused, and more easily controlled.
There is nothing new on Wall Street or in stock speculation. What has happened in the past will happen again, and again, and again. This is because human nature does not change, and it is human emotion, solidly build into human nature, that always gets in the way of human intelligence. Of this I am sure.
Which brings us to our segment:
Let’s review the Market Insights from the great trader Jesse Livermore:
(We are taking them two at a time)
13. Losing money is the least of my troubles. A loss never troubles me after I take it. I forget it overnight. But being wrong – not taking the loss – that is what does the damage to the
What Jesse is saying about losses, every trade knows deep down that he is right. You see, there are no successful traders who cannot take a loss and move on. Let’s try and prove this mathematically. What if you had 15 losses in a row on a $10,000 account. Not likely, but what would your account look like? Well, if you trade like a professional using a max 1% loss for every trade, you would still be in a position to figure out what you are doing wrong. If you use 7%, it’s pretty much game over.
Bill O’Neil of Investors Business Daily, a man who I greatly admire, says in his best selling book “How to Make Money in Stocks” that a trader can use a 7% – 8% loss as his or her stop. Can you see what happens to the average trader at 7%? The retail trader cannot trade like a hedge fund or bank. They can ride out dips in the market with their
And I think what Jesse is saying in #14 is that you have to follow price and your own methodology. Again, in 38 years of trading, I don’t know of a single trader who has made consistent money following the news. And following your own method is a must!
Dr. Van K. Tharp, (a well known Professional Coach for Traders and Investors) says: “A mistake is when you don’t follow your rules. If you don’t have rules in trading, everything you do is a mistake.”
So in closing, I would say that as we look at the market over the last two months, we have had constructive consolidation. Very little selling over those same two months translates to higher prices at some point in the near future. Will that be this week? It’s
You may have also noticed more and more market “professionals”, “gurus”, and other newsletter writers talking about the “odds” this and that. Or how they now know that predictions don’t work. This is something you have heard from Stock Option Coach for the last 8 years of this bull market. More and more traders who have a following have found that their predictions continue to fall flat, and they are also realizing that this really is just a game of odds and probabilities.
As I have been saying now throughout this entire bull market, “It’s a Bull Market till it ain’t”. (So far I’ve been proven right). And as all successful traders come to realize eventually, it’s not about being right or wrong. It’s about making consistent money in the markets, and being able to have a quality of life where we choose what to do with our time.
Remember, a great attitude and persistence will lead you to great heights in trading. And you really don’t have a choice. I have never met a successful, wealthy individual/trader who did not have those qualities.
All the best,