Hello All!,
Life has been quite the ride these days as we welcomed a new human into the midsts of our household. Suffice to say sleep has been lacking but the joy is overwhelming.
While I am still not sure what this substack is for, I am starting to find out what it is not. I don’t necessarily want to build a paywalled stock picking service. I want to use this canvas as a way to put my thoughts on paper and potentially leverage my work for myself and potential future clients and employers to evaluate my investment approach. At some point I will paywall my posts and picks, probably after the next trading rally, but I have decided to put out as much of my thinking until then (in-between burping and diapers that is).
Let’s jump into it.
The market is at a critical juncture here with sentiment quite bearish and charts looking positively curious. When divergences from my expectations occur, it’s time to focus and pay attention. I bought some stocks today. TSLA 0.00%↑ and PLTR 0.00%↑ to be precise.
DISCLAIMER: This is not investment advice. Do your own due diligence.
While I try not to follow the news, it’s been quite hard these days. War in the middle east, rising yields, inflation worries, and government disfunction paint a bleak picture of the current state of affairs in the world. However, individual equities, particularly megacaps, seem to be exhibiting relative strength and not making new lows with the indexes. When this occurs, I look at my watch list and see what’s actionable.
I always have a watch list of stocks that exhibit relative strength and have the fundamentals to become true market leaders
There are primary and secondary indicators that I monitor to determine the strength of a trend and whether its conducive to my style of investing
CANSLIM’s follow-thru day (FTD) methodology
The largest stocks in the market
The performance of stocks on my watch list
Net new highs/lows; breadth
Sentiment
Currently they are saying the following:
IBD listed a FTD on friday
Megacaps are showing relative strength with TSLA not making lows with the indexes along with FB, NVDA, GOOGL, etc. TSLA and NVDA are the two i’m particularly focused on during this rally given the group strength in autos and chips.
Quite a few consolidations are shaping up and building the right side. Volume is still somewhat suspect but a few seem to be standing out such as PLTR 0.00%↑
Net new lows are still negative so this is a negative.
Sentiment remains bear so that’s a plus.
So that’s a quick summary of the current state of affairs. I am by no means a bull in a china shop just yet but i’m being tactical and looking to establish lower cost positions in stocks that I believe have the potential to lead if the market cooperates.
Fundamentals are solid and in a technically strong group with the AI theme in play. Technically the prior uptrend shows the big boys want it. The base is somewhat choppy but it trades $1B a day. The strength up the right side is great so far. I have a low cost position in with stops and looking to really size up on a strong breakout around $20 and look to sit through the first correction if strength continues.
Fundamentals are solid for a mega cap but there are some concerns around margins with TSLA dropping prices on all their models. Accelerating sales and earnings from the prior quarter and EV theme is where my focus is. A stage 2 base with tightening daily, weekly and monthly charts a la Minervini’s VCP pattern. Established a low cost position with stops and looking to size up into a strong breakout.
Other stocks with strong characteristics that I am stalking are:
VRT 0.00%↑ PANW 0.00%↑ MDB 0.00%↑
Other lower tier stocks i’m monitoring for potential leadership are:
Overall, I think if we are in a potential start of a bull market then we are in the early innings. We do have a few stage two bases in leading stocks but I don’t feel like a kid in a candy shop yet and therefore I am moving cautiously into the market. Growth investors have had two rough years so most of the excesses have been washed out of the market and we could be due for a classic bull market uptrend.
P.S. - I have been using the new DeepVue charting software. I’m still working out the kinks on how I was to display the charts. The options they have are endless and the development is really neat. Check em out!