Dr Ivor Royston, cancer researcher and co-founder of Biogen Idec was once quoted as saying:
"There are three types of people in the world: Those who make things happen, those who watch things happen, and those who ask: What happened?"
When it comes to the stock market, I am clearly in the 2nd camp. I don't have enough capital to move the markets, but I am certainly a keen observer. So the question is, if a major breakout occurred in the stocks you are following, would you be able to spot it?
I ask because we had major breakouts in all 3 of the US stock market ETF's in the past week. I think everyone expected a rally on Monday for end of 2nd quarter window dressing. Some even could have expected some buying on Tuesday as new money came into the market for 401K and pension funds who have into invest their new monthly fund in-flows.
All this bullishness of course led to new all-time highs in my net worth, but is that an accomplishment to celebrate? Don't confuse brains with a bull market I like to say.
Getting back to the point of this blog post, what does this mean for our trading? Simple as follows:
1) Run the New High, Low PE, High Growth scan as described in my prior post.
2) Run the above scan between 3:30 and 4PM EST on market days.
Its best to run at this time of the day since most of the daily bar has already been formed, but the trading day is not yet closed. It kind of like waiting for the horses to clear the Clubhouse turn before placing your bets. If you had the change to do that you would right? Of course and you would since its like placing your best just before the race ends.
3) Buy breakouts to new all-time highs after period of consolidation.
This item gets to the guts of this post. Look at the charts above. Notice how there is a single daily bar when the stock or index breaks above recent resistance to a new all-time high. This is the point at which you want to enter. Those bars are show above in gold. Take the time out of your day between 3:30 and 4:00 PM and enter on breakouts. If you follow this simple method (along with items #1 and #2 above) you will be financially rewarded and then be able to take care of your family, grow your wealth and enjoy the fruits of your labors.
Happy 4th of July to all and God Bless America.
And have a great week ahead.
FYI - Following this system, I picked up new longs in Discover Financial (DFS), Taiwan Semiconductor (TSM) and Capital One Financial (COF) this past week.
ReplyDeleteFor COF, I was clearly about 3-4 bars too late, but with a 5-year earnings growth rate of 107% and a PE of 15, the stock could easily double from here. With a stock price of about 85, it could easily turn into a case of the Cramer 80 to 120 play where the stock goes from 80 to 120, then splits 2 for 1 and does it all over again ..