Thanks Pete so the low for the day was $157.25 and I picked some up at $163.53 so that is well within the 5 percent rule. I set my stop at $155.35. The fundamentals on SRPT look really good .
I sold my Mu today for a 7 percent gain to take some profits. It has been coming down the last few days and I didn’t want to give them all back. I am thinking about taking some gains also. I am going to go through my portfolio this weekend and look them all over.
Andy
Good call, earnings coming and you need a good profit margin to hold through earnings.
Micron reports fiscal Q3 results on Wednesday. It’s expected to report a profit of 42 cents a share, the first positive reading in six quarters. Revenue should surge 58% to $5.82 billion after Q2’s 16% gain.
The memory-chip giant’s results and guidance will be important for other AI plays. It will also affect the broader semiconductor space, including chip-equipment makers.
Yes, always rank your stocks, at least once a week. I have 3 categories: Best/Add, Medium, and Low. Often, a new buy will start out low unless it gave me a quick profit margin.
IBD says 80-100% invested, but they also say maybe be closer to 80%.
EDIT: MU did find support at the 21dma. Even though you sold, keep tracking it to start getting a feel of support scenarios like that. If it had popped up on strong vol from there, it would have been a strong sign of support.
Also, IBD recommends taking profits in the 20-25% range because that is often when stocks take a breather, which was the case here. For me, that is one of the most difficult sell rules because everything seems great at 20% profit (from the buy point). The counter to that is that if it goes up 20% in a short period, it is a sign of a stock with greater potential and you try to hold for 8-weeks then reassess.
From his book:
○ Major advances require time to complete. Don’t take profits in the first 8 weeks of a move unless a stock gets in serious trouble or is having a 2 or 3 week climax run up on a stock split in a late-stage base.
○ Stocks that show 20% profit in less than 8 weeks should be held through the entire 8 weeks unless they are of poor quality without institutional sponsorship or strong group action.
○ In many cases, stocks that move dramatically by 20% or more in 1-4 weeks are the most powerful stocks of all - capable of doubling or tripling. Try to hold it through the first couple of times it pulls back in price or slightly below the 10-week moving average price line. Once you have a decent profit, you could also try and hold the stock through its first short-term correction of 10%-20%.
Good article for IBD traders…
When To Sell Stocks: Nvidia Reveals 8 ‘Secrets’ And No. 2 Is Key. | Investor’s Business Daily (investors.com)
Pete and Andy
What are your thoughts on NVDA, AVGO ,SMCI and AMD? Are you still holding? If so, what would be the rationale. Do you guys have this is a buy and hold given the AI hype, and first runner advantage with great numbers? or just a trading position?
For a stock like this, say NVDA and AVGO, would you have a more relaxed stop loss knowing that it always has this volatility but great numbers so far, or is it 7% stop loss on any positions no more what…
Thanks,
Charlie
Hi Charlie, Here is my thoughts, and realize I am playing with IBD rules. For NVDA, I have had that for a long time. Before Pete turned me onto IBD Marketsurge. So My cost basis is a lot lower and I can let it run. I think NVDA hasn’t even started to be done yet. But the way I am thinking of it, if it drops below the 50 day I will sell it all and monitor it for a chance to get back in.
Now SMCI I had for quite awhile also but it dropped below the 50 day so I sold it all. I bought it back when it went above the 50 day. But I set a tight stop at $889.60 just in case it dips back down. I like SMCI better than HPE or DELL because they seem to be more a pure player and the server market will move their stock more.
Now AMD and AVGO I do not have. I wish I would have bought AVGO at the pivot point of $1438.17. But I missed it. It has been coming down, but so have all the other chip companies. If I owned it I would have a price in my mind that I am going to sell it at and write it down. Put it over your computer.
AMD I am not really interested in unless I see their Revenue start to pick up. It’s funny that everyone is saying they are going to kill NVDA but I think NVDA is at least a year maybe two ahead of them. So I have 24 percent of my portfolio in NVDA and that is enough. If I started seeing AMD coming on I would move some into them from my NVDA portion.
I did buy MU recently Charlie and just sold out of them because I didn’t want to see all my profits dry up. I was up 19 percent on them and they dropped down to 7 percent. The chip companies seem to be getting hit so I am taking on a little cash and moving some into other companies IE medical because they seem to be getting rotated to.
What I have been learning Charlie is that it is best to have a stop, at least written down, where you will get out of a company if it doesn’t work out. If you start seeing the companies you start a position in, failing time and time again, start making your positions smaller and tighter stop losses. If your positions are failing it could be, because we are going into a market correction, or, you are entering the stock incorrectly. So you need to study what you did wrong. Now this is all IBD methodology, and it is important to know what your rules are and what rules you are following. If you get a chance Read William O’neil’s books and Mark Minervini’s books. That is, if you are interested in the IBD methodology.
Now Charlie these are just my thoughts, so take them with a grain of salt. If you ever get a chance for a trial on Marketsurge, try it out. I used to get IBD newspaper but marketsurge makes it very easy to find the best stocks and where everything is rotating to. Also, realize that I have just started using the IBD Methodology. You are going to make mistakes but that is ok, mistakes are all part of this journey. What is important is to learn from them so you do not make them again. By setting stops you can keep from losing large sums of money but also it let’s you have your winners run much further.
Andy
Thanks a lot Andy. Really appreciate that! I agree, NVDA is one heck of a company…Funny enough, AVGO has a big price target of $2000-2200 by many analysts…If I had not started a position on either of these in the last week, I may be looking to buy them…I dont see the story having turned at all…and both gave stellar earnings recently…
Anyways, based on the IBD Marketsurge, what would be stocks that you would look to buy?
And are you finding value in that…What has been your overall winning trade % and is the dollar amount from those wins significant enough that you feel totally bought into this system?
Thanks again,
Charlie
Every weekend I go over the stocks in the market for the next week. The Stocks I am in now are SMCI, TMDX, WING, NXT, HOOD, SRPT. Using the IBD Method. Realize that I have only been at it or about 2 months so you could say I am still evaluating it. Pete has been at it a lot longer than I.
I also have These stocks that I bought before IBD. Eventually I will be selling them off using IBD Methodology.
ELF BITB, VKTX, and NVDA
Some Libraries have access to IBD digital that you can get access through your library. Unfortunately mine only has the paper.
That is a great question Charlie and realize I am just learnings so I am making mistakes. Also, although my portfolio has done well this year because I owned NVDA, SMCI, ELF, and CELH. Those all were big performers but I can’t count those because that was before IBD.
I have 9 stocks that have netted me a profit. I have 6 stocks that I loss money on. Now realize some of the winners and losers I still hold. I still have 3 of the winners and 2 of the losers still in the portfolio. The 2 losers haven’t hit their stop yet so it is possible that they will come back. That is one of the things that IBD has taught very well. Before buying anything write down where you will get out. This helps you realize what loss you are willing to go out on. Although I haven’t actually put on stop losses, i do have an alert emailed and sent to my computer when it is hit. I am thinking of actually putting stop losses on because although I had a stop loss set on ASPN for 8% by the time I was able to sell it had dropped another 1.5 percent. It is very important to be disciplined though. You can’t say I am going to sell if it drops this much and then not do it because your losses will get away from you.
Anyway, Using the IBD method my portfolio is up 35.38 percent. The way that was calculated was I added up all my percentage gains and subtracted all my percentage losses. The real great thing about this method, at least in my mind, is that I do not want to be a day trader. Not that there is anything wrong with that, it just doesn’t fit my temperament. So this method allows your Winners to really run, but cuts your losses down. Right now I have my stops set 8 percent under my buy point. IBD recommends moving it up higher if you are getting a lot of losing trades but actually having 9 winners and 6 losers isn’t that bad. When you let your winners run it allows a much higher percentage of gain in your portfolio which makes up for mistakes like ASPN. But the guys who trade small, well that really hurts them because they do not have any really large winners.
Thanks for the question Charlie, it showed me a flaw in how I was keeping track of all my trades. I have been writing them all down in a notebook and keeping track of my thoughts but what I should be doing is putting them in a spreadsheet so I can see how I have been doing every month. I add up my portfolio every month to see how it is doing but since I have stocks before IBD I haven’t added them into this calculation.
I would suggest if you think you want to try this method to first read the William O’neil books and Mark Minervi books. You can probably get them at the library. They are really eye opening. Marketsurge to try out was very cheap, I think 50 dollars for 2 months, Now I think I am paying $1500 dollars, but to me, that is very cheap. It has an amazing amount of information and financials are built in also. But I like growth stocks and it makes it very easy to find them.
Andy
Once again, thanks so much Andy! It was great to get your thoughts on the new method, and I am really glad for you that it is working well.
I will read those books you mentioned. Thanks again.
I am also planning to give the Marketsurge a go, but wanted to at least read the book before going in. Do they have a video on how to use the market surge etc…I have heard they have different screens, but wasn’t sure if they have any in-house tutorials on how to best use those. Also, in market-surge, do they recommend the leading stocks that may be a buy/ stock picking service? or is it up to us to use their screeners etc to decide what to buy?
I also thought about their swing trader service…and it is not the cost of the subscription that is holding me back…just the lack of knowledge on what exactly is the true performance of such a service.
Thanks again Andy!
Charlie
Hi Charlie, Marketsurge isn’t a stock picking service, it is more of a screener, charting, and fundamental service all in one. They have preset screeners and also screeners you can make yourself. The charts show cup and handles, consolidation patterns, flat bases, etc. With the proper buy points. it also shows you what each company has made in earnings and revenue and the growth along with the next 4 quarters of expected growth. You can also see how each stock would be rated with a view on Buffet, O’Neil, Graham, etc. viewpoint on the way they invested.
So Marketsurge is more of a do it yourself service but makes it easy to find the top stocks. They also have video’s on how to use the service. There are many of them that you can work your way through
They also have IBD Digital which is more like a Newspaper format and is exactly like the paper. Giving you the IBD50. IBD20, and IBD sector leaders, but doesn’t have the charting.
Then you have leaderboard which is a stock picking service. Personally I thought it was to busy and they were always changing in and out of positions, reducing positions, but they did seem to be it many of the better stocks. But I thought they held to many, I only want 10, no more.
Then you have swingtrader, which I haven’t seen, but I understand that they are very active and they stop out at 2 percent because they are much more short term. Although I understand that they can hold a position longer if it seems to be working well.
I would say Charlie that when a trial subscription comes up try it out. Or call them, they may give you a trial subscription. I wouldn’t buy any of them till you try them out because you might think one product is better than another.
That is the thing Charlie, We have been in a confirmed uptrend. IBD will tell you how the market is doing and whether you should be pulling back. But since we have been in a Bull Market I have been doing well. When it comes to a bear we will have to see. What I am hoping for is that I will be out of the market if it starts a bear market. How will I know? Well hopefully IBD will be right but also I am not going to hold anything under the 50SMA. At least nothing that was bought under the IBD rules. One other thing Charlie, You can go onto youtube and search Mark Minervini, Can Slim, or William O’Neil and lots of videos will come up.
Thanks for the questions Charlie, you have helped me think through some of this.
Andy
Thanks a lot Andy! Truly appreciate your thoughts on these. Really appreciate that!!
Your welcome Charlie, Pete and I are trying to make this place a place to learn so everyone’s input is welcome. Just realize that what I think might not be correct and you should make up your own mind. There are many ways to invest and the important thing is to find the one that suits your temperament. But the only way to learn is to try them all and understand.
Another book to read is Stan Weinstein’s secrets for profiting in a bull and bear market. That book will show you the life cycle’s of stocks and markets. Another book is Edward Thorp A man for all markets. He is a mathematical genius and explains the theory behind all these investing type’s. It is enlightening and will help form an opinion in which way to go. Some of these books will need to be read more than once to truly comprehend.
Edit: I should have said also, Pete set this string up for only investing in the IBD method so it would be helpful if everyone would follow that methodology when on this string.
Andy
After discussing all of this with Charlie I realized I hadn’t been keeping track of my trades very well. So I went into my brokerage account and put them all into a spread sheet. Here are some results that I found interesting.
Ok after reading Mark Minervini’s second book He came up with a few interesting ways to look at your portfolio. So what he does is take your average wins and average losses and comes up with a batting average. My batting average is 66.67% which is really good. I had 12 wins and 6 losses.
My average hold days for my wins was 19.33 days, now realize I am still holding some stocks so this could still go up. My average hold days for losers was 14.33 days. Now I am still holding losers so it’s possible this could go up but I am thinking it probably won’t because I am going to cut my stop losses down to 5 percent instead of 8 percent.
My average Gain was 6.44 percent and my average loss was 4.6 percent for a ratio of 1.40 percent. This isn’t very good. The reason for it being low is because I have been holding some stocks to long and my stops have been to loose. That is why I am lowering my stops. When you have a loss of 9.5 percent and 6.3 percent that really boosts your averages. Also when you have wins that are 2 percent that really hurts your averages also. But it is ok if you trade frequently and have small wins as long as you do not have large losses. Think of it like baseball. If you are the lead off batter you only want to get on base. Generally these guys are hitting singles and they have a higher batting average than say the Clean up hitter who is hitting homeruns. So the lead off is getting on base and then hopefully the Clean up will come in and hit them home. The problem is the Clean up has a terrible batting average. So to hit homeruns you need to keep your losses low. I would like to get this up around 2.0 percent or higher. The way to do that is lower my stops.
So after going through this it really showed me the weakness in my trading style. Here is a video explaining the process.
If you click the more underneath the subscribe button, he has a rudimentary spreadsheet that will start you out.
Andy
Andy, lots of excellent information, thanks for the work.
RE: tracking. Some smart guy at MF created a Google sheet that is pretty good at tracking. It is better at long term holdings, but still good. You enter the date, price and share count and it will track it against the S&P. It has a tab for current portfolio performance vs S&P. The weakness is when you sell (and it does not track cash). You move your sold items to a “sell” tab and that is not summarized. However, you can do some summations and figure out your total losses and losses vs S&P performance. I can post a link if anyone is interested. Also, what I like to do (at Fidelity), is create a completely different account for my IBD funds (and my SimonSez) funds. So, I just create a new IRA account then transfer in cash in a nice round number (I am OCD) and let the account show me the total return over time (absolute and vs S&P). But I do mess it up, I sometimes go on “virtual” margin when I am out of cash in my IBD account. I will buy an IBD stock in my main IRA or Roth IRA, so those can only be tracked well in the spreadsheet.
Here is my record YTD for the stocks purchased in my IBD account and not with “virtual margin”.
RE: holding. Of those noted, I currently only hold NVDA in my IBD account.
So what I think of NVDA has to be in context of my holdings and profit margin. If I had bought all these shares during the current breakout, it would have been at the gap up day, which was above the 5% buy zone. That is ok to do on a gap-up, but my basis would have been way higher. In that context, maybe I would have sold all shares after the ugly downside reversal day. As a side note: I have to be psychologically cool with buying back a great stock when the facts change. So if I sold quick, I would be looking to see strong support and an upside reversal from the 21dema.
But, as you can see from the data and the chart below, I have some shares I bought on the Jan 8 breakout. You can see all the ups and downs I was willing to ride out because it went from $50 to $75 before its first test of the 21dma. Then I was able to hold through that base that started in March. You can see from my green horizontal lines that I was buying this stock before the breakout of that Stage 2 base. This was partially because I had a huge profit in a current IBD position, and partially because IBD team always talks about early buy opportunities so I try finding those and buying smaller positions while waiting for a breakout.
So here we are now, what do we do. An IBD position trader is NOT trying to catch a falling knife, this is the wrong place to buy. But what do I do? My most likely move now is to sell half of those new positions I bought early in back in May, or maybe I will do that if the 21dma does not hold. Not 100% sure as I write this. NVDA and the Naz are extended. IBD exposure is set to 80-100% and they talk about being closer to 80%, so I should have some cash (I did sell my weakest holdings already).
Notice that I am trying to form the habit of writing a “sell plan” note on my charts, that reminds me every time I look so I don’t get caught off guard or forget my discipline.
If you look at SS3 OHLC chart, it seems better than IBD. You would have been in for all the gains and out for all of the losses. It seems like using those price labels is foolproof. Just not sure it can be.
Hopefully this was not too long and incoherent, I didn’t have time to write a shorter one.
Pete
I had 3 stocks today jump above the buy point. Spot, Nu and Podd. Of those 3 only Nu did it with high volume. All 3 of them sank down below their buy point. The only one I would have gone for was Nu because of it’s high volume but i am glad I didn’t bite. This seems like the market is struggling. Here is a chart of Nu. See the nice volume but notice how the Candle retreats.
Andy
I had setups on Arm, Cybr, NU, WDC, Spot and HQY today. All at or near proper buy points and they all failed.
I sold Bitb, NXT, SMCI, and partial NVDA. I do not like how this market is setting up and want some cash.
Andy
Ok this is Interesting and something I read in Mark Minervini’s book. You can find him on X also.
THE POWER PLAY
Rounding out our discussion here is the power play, also referred to as the
high tight flag. This is one of the most important and profitable setups to
learn—and one of the most misinterpreted among all the technical patterns. If
you get it right, though, it can be one of the most profitable. The power play
is what I call a velocity pattern for two reasons. First, it takes a great deal of
momentum to qualify as a power play; in fact, the first requirement is a sharp
price thrust upward. Second, these setups can move up fast in the shortest
time, and often they signal a dramatic shift in the prospects of a company.
The rapid price run-up could be induced by a major news development such
as an FDA drug approval, litigation resolution, a new product or service
announcement, or even an earnings report; it can also occur on no news at all.
Some of the best trades from this setup can develop as unexplained strength.
Therefore, this is the type of situation I will enter even with a dearth of
fundamentals. It doesn’t mean that improving fundamentals don’t exist; very
often they do. However, with the power play, the stock is exhibiting so much
strength, it’s telling you that something is going on regardless of what the
current earnings and sales show.
Although I don’t demand that a power play have fundamentals on the
table, I do require the same VCP characteristics that I do with all the other
setups. Even the power play must go through a proper digestion of supply
and demand. With a power play, you should look for tight weekly closes over
three to six weeks.
To qualify as a power play, the following criteria must be met:
You can read all about it in Mark Minervini’s book
Now if you look at SRPT, I believe that explains it perfectly.
Andy
It seems Mark would now be waiting for the consolidation that follows this jump, is that how you read it? Then after a sufficient time, it will jump above the high of this flag pole and that is when it should be bought by his rules. (and yes he is closely related to IBD, uses their MarketSurge, appears on their shows. May have even worked for Bill at some point)
I see you mention me in a comment and I think you left of one little thing I said. I certainly meant to say that the IBD team often says you can buy within 5% of that opening price of the gap up. I think you left out the 5% caveat or I did not tell you right. Either way, on the daily the low of the gap up was about $157, which means IBD rules allow you to buy up to about $165-ish.
Pete
Good Question Pete and yes Mark does work closely with IBD. They even have 3 of his stock screens on Marketsurge. I am not sure if he worked for them but that is possible. As far as the High Close goes. Look at the chart that Mark had in his book. Do you see the flat just before the sharp jump up? I believe that was the consolidation he was talking about and then when it jumps it should be bought right as soon as it passes the pivot point. So even though I didn’t realize it, I believe I bought at the right time.
Your right Pete I did forget to put the 5 percent phrase in. But if you notice I did calculate it at 5 percent so you did tell me that, I just didn’t mention it. I will correct it thanks. All of this is making more sense after reading more on all this.
Edit: Pete after reading back through this I think you are right. The explosive move first, consolidation and then a move higher. So I many have bought to early but waited for the consolidation. Thanks.
Andy
Ok Pete I am going to break this down because I think this is important. You can correct me where you think I am wrong.
To qualify as a power play, the following criteria must be met:
So if we look at the chart of SRPT on 11/3/23 it was at a low of $55.25 it went up to $121.91 on 1/12/24. That was a gain of 121 Percent in 11 weeks. So while it had explosive growth it missed on the 8 week phase.
So then it consolidates for 17 weeks and correcting at most at 25 percent. So it doesn’t pass this phase either. The timing is to long. So it looks like I am incorrect. Thanks
Andy
I noticed a lot of set up failures again today. AMGN, HESM, APO using the IBD Method all failed. I am starting to wonder if we are having a sector rotation. The Markets seem to be holding up well but a lot of stocks are failing in their setups. It’s either that or the storm before the down turn.
Andy
