Great Instruction Pete, really like the information.
Andy
Andy, I love this company and the stock. I have a good amount from MF recs, and this is a good opportunity to add to my long-term non-IBD holdings.
If you are buying this under IBD rules, you know it is not breaking out and you are making an early buy. Early buys are legit and this is probably a perfect example: earnings gap up, breaks above the dreaded 50dma at same time, volume 210% above average. If this was a breakout, it would be a good one. The day before was also a pop on high volume but it was stopped below the 50dma. Did some earnings news leak? Were some big investors making a bet. Does not matter at this point and you definitely cannot buy it the day before earnings. Sure, you paid a lot more now, but you know a lot more now, there is a lot less risk now. Sometimes on a gap like this, I see 2 more days up, then a rest. Sometimes it maxes out at the gap high point for a while as it catches its breath. That is what you want, a nice tight bull flag, then when it goes above that you add a little more. Then with the real breakout you finish your position. This could even be a place to cheat and have a bigger position than usual. If you get this buy and another before the breakout, then you have a big cushion and can make a bigger bet, but don’t go crazy. If this stock is going to work for a huge run, you will have more opportunities. Besides, the price might be way above the 50dma by then and that makes it extended and riskier.
This a stage 1 cup base and we like that. Stage 1 and Stage 2 have more success. By stage 3, the word is out and you start getting FOMO investors and weak investors, which increases the chance of failure. But wait, the base before was a Stage-2, what gives? IBD rules say that if you have a breakout from a base and then the price goes below the price of the base, then the base count gets reset. Guess that comes from the years of research.
RS is only 74, but that will come up now, we like a much higher RS, but obviously that bad earnings from last time started this slide and killed the RS. It also killed the EPS rating, which is now only 54. So part of the assumption of buying now is that previous earnings were a one-time event and we are going to have smooth sailing for a while. One of the things Bill likes is to see a big shakeout near base lows to indicate weak holders are leaving. We see this in the daily chart with two high volume days as it fell through the 200dma. A lot of people rely on the 200dma and if it fails to support, they ditch their stock. It is a self-fulfilling prophecy.
You have posted the weekly chart and that does show a pretty steady rise in the earnings line, which shows earnings gains (%) and does not just represent an absolute earnings amount. The earnings and sales estimates going forward are pretty nice, but they are estimates.
One of my flaws is to be over confident in a stock this is an “old MF buddy”. I have bent the rules to buy an old buddy. Probably I have bent the rules more by not selling an old buddy I bought with IBD rules but justified holding because it was my old buddy. I did this with SWAV. I had a big position from an MF rec long ago, then I bought on a breakout. The breakout failed, but I held. Even worse, I had so much confidence in the company and averaged down - a strict no-no in IBD. I got very lucky when it was taken over in a merger. Made a good profit, but I was a horrible IBD investor. Just watch for that. Be and IBD robot without a heart.
So, I have nothing bad to say and maybe I will take any early buy in it Monday.
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Is Spotify the next Netflix?
Watch this 9 minute video of how Bill made 750% on Netflix in the early days. It makes me wonder if Spotify could do the same thing. Everyone I talk to prefers Spotify over others. Buying out of the next stage-4 base would not be where you really want to place your bets.
750% Netflix Stock Trade: How IBD Founder Bill O’Neil Did It - YouTube
The chart right now is not good for buying. It has had a long run up and most recently broke out of a stage-3 base and made a 50% run. Also, it had a nice pop on earnings day, but the next day was a high volume sell off. If you look at it from the high of earnings day to the close of the next day, it is ugly. On the other hand, you could tell me it did find support on the 50dma and that I told you the first trip to the 50dma after a breakout is a good place to add. Both things can be true 
If I had bought it at the last breakout at $202 and had a 50% profit cushion, maybe I would have bought at that support. I can’t tell you for sure because I did not experience that reality.
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Here is an interesting PDF to build on charts.
Andy
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IBD Trader homework.
You should watch this entire video (watch every Friday review)
Nasdaq Retakes 16,000 With Gusto; CEG, Skechers, Apple In Focus | Stock Market Today - YouTube
But if you don’t have time, watch the discussion on stock charts here…
○ At 10:15 mark, they discuss constellation energy and the importance of the blue dot (go watch). should be at the top of your watch list. But, earnings are in 6 days.|
○ 12:01 talking about CPNG|
○ 15:00 APPL has been in a long base and it has a long way to go before we want to trade it.|
○ 15:55 GOOGL. This is what you want to see. It had a gap up, but closed it in a constructive manner. (Did not close the entire gap). Today was a setup and gives us the expectation that on Monday it moves up.|
○ 17:30 Sketchers (just added to their swing trader service) Study this earnings gap. Today was a setup day with the expectation of up on Monday.|
○ Around 22:00 starts analyzing market charts. Old trend is broken, looking for a new trend.|
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Andy, thanks, good chart to study. This is also on page 38 of his book (Chapter 1 = 100 charts). Once you start studying the 100 charts, you will find a lot of recurring patterns. I am keeping a list and will post later, but some related to this chart
- many if not most of the big runs start after a market correction and in conjunction with a strong FTD.
- shakeouts with good finishes higher in the range
- Multiple up weeks in a row. 16 here, 12 on the United Surgical Chart from 1990 (that I was just reviewing today). They have a new feature in MarketSurge called Ants. It shows when 12 of the last 15 days were up, volume was up 20% or more and the price after the 15 days was up at least 20%.
- This chart had a 6-weeks flat base that ran up again a rising 50dma and then broke out. Very many other charts show a 4 or 5 week tight pattern that lets the 50dma catch up to the price and then jump up. These are add opportunities were you add a much smaller amount than your cost basis
- this chart also shows where you got signals to sell, but later you were supposed to buy it back. I for some people, this might be hard to do, why sell something and buy back. But is shows up a few times, so learn to do it.
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If anyone is watching ALKT it is down today. But if you look at it on a chart it looks like it might be going to form a handle. I should have probably waited to buy it but this will be interesting to see. I don’t mind making mistakes in order to learn. So I bought at $27.48 and my stop is at $25.56. I am going to hold to that and we will see. Cava is doing very well and TMDX is too.
Andy
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I peeked at it early and just now. It is only down 2.56%, but going down 246% higher volume than average at this time of day. That is a lot, but I am not too worried. It is in the lower part of today’s range. If it were to pop up above the 50% level, that would be a sign of support. I am still considering it, but am already loading up on a number of early buys and breakouts.
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I am a little worried about the volume today, it doesn’t seem to be very high on the indexes.
Andy
Here are some breakout stocks to examine today
Modine (MOD). Was also stock of the day, which could boost activity a bit. I owned it for a while and regret selling. I will to an analysis on my mistakes later. +17% vol and it is not breaking out yet.
BAH - but I don’t consider this a growth stock. It was IBD stock of the day recently. +346% vol. Usually when I don’t like something is does very well. Ugh, I just bought half a position!
Tradeweb (TW) +73% vol, barely above buy point. I like this stock. They allow people to trade fixed income like we now trade stocks, so lots of potential for growth.
AXON: broke out and faded, vol is +56% Very they make tasers and Axon body cameras and subscriptions to evidence.com to properly store your body camera evidence.
DUOL (Doulingo) Just above buy point +44% vol. I am a user to learn Spanish I got tired of ads and paid the fair 1-year subscription. I hate paying for stuff, so if I pay for these, a lot of people do! But it is a stage 3 base.
CARR: really too late to buy, but study this. Look at the giant jump on earnings, then 3 days of decline on declining volume, now back up to top of buy zone. Will ALKT do this?
GCT. If you are speculating on power moves, check GCT. I broke above a downward sloping trend line and above a recent high. 4 consecutive up days. Today vol is +23%
SHAK. I have a small position and it broke above a consolidation top, but then faded below, so I am not adding.
ERJ (Embrar Aerospace Brazil) I own this, sold half when the market was correcting and have been adding it back and bought a little more today. Seems very strong. Briefly above buy point today, but now below. vol only +11%
Watch for a market and stock fade at end of day.
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Check out the chart of MOD, almost broke out today and has a blue-dot RS of 99. I really want to buy this back, but I am about 85% invested, which is above IBD’s advice at this point. I will probably sell some of my small positions to justify it. They do industrial cooling, including AI datacenters. I will sell my small position in SHAK and SFM if I want to buy MOD. Bill was never afraid to sell a weak stock to buy a better stock. SHAK is weak and SFM is too small in my portfolio.
I bought TW yesterday and today, so have a full position now. I also have a full position in ERJ.
STRL had a strong breakout today. Infrastructure play.
DOUL still in buy zone.
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There appers tto be a typo error for one of your stocks.
Some folks are not following the simple rules via the chatter.
Next somebody bought a stock that is already going around the first turn and who will know if the stock drops dead.
COST #2 at year 2
Total returns
$4,899,693.95
Total Profit as of 5/6/2024
$145,759.00
I wish you the best.
Quill - who currently manages 16 stocks and 12 SPDRs long term. Only chase money making stocks for Side Bar action via Trend Seeker and any stock that jumps over the 20 EMA.
I gave up on IBD when I wasn’t making any money. ( 7 figures.) 45 years ago.
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This is funny, when I was attending one of many IBD seminars in Santa Monica. Mr. O’Niel kept on pointing to the crossing over the EMA line to BUY or SELL. And at times he mentioned using two (2) moving averages shown sometimes on the current IBD Charts as I have noticed.
At the seminar Mr. O’Neil said to buy a few stocks to help pay for the trip when we get home. LEN was one of them. The also said to trade LEN for the long haul.
COST #2 at year 2 for the long haul. Target is for the Grandkids College education 6 to 10 years out.
Total returns
$4,899,693.95
Total Profit as of 5/6/2024
$145,759.00
Quill -
Side Bar action :
// Scan 60 - 20ema - when the price crosses UP and over the 20ema
[type = stock] AND [COUNTRY = US]
//and [SCTR > 90]
AND [Daily Volume > 500000]
AND [Daily Close > 10]
and [Yesterdays close <= Yesterdays EMA(20)]
and [Todays close > Todays EMA(20)]
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@Quillnpenn thanks for the examples of non-IBD investing, but I would rather not discuss the other 1000 approaches on this board. I do want to explore your Simon Sez when I have the chance and if you could do real time examples on that thread, it would help me a lot.
Thanks.
5/9/24: a nice up day in the markets, just no good volume pushing us up. But I am getting over committed given how timid the volume is. Earnings continue to be the big drivers and we keep getting proof that we should not open positions right before earnings.
SHAK, AXON and CELH were small losers the day after earnigns. DUOL was down 18%.
I have full (90%-100%) positions in ERJ, SCHW, TW. About at 80% in REX, BAH, NVDA.
ALKT is at 50%, VRT, CAVA at 30%.
Bought a 50% position in AVAV today. The breakout vol was below the desired 40%, but I had a decent non-IBD position sitting at a 50% gain and the RS had a blue-dot and sitting at 96 with all the trendlines in the right order and very solid growth rankings. This was outside of my segregated IBD account because I added it to my existing. I will track as a separate IBD buy as usual. (So I am way above the 40-60% IBD recommended exposure, so I will probably pay for it).
I did sell my small positions in SFM and SHAK to reduce exposure a bit.
MOD had a very low vol “breakout”, can’t buy it on that.
NVDA is working on a cup with handle base, but needs another week before it can be declared one (7-week min). The handle is forming by gently going lower on lower volume, this is an ideal way for it to happen. The buy point would be at the peak of the handle, not the left side of the base.
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I don’t see it Pete? NVDA says it’s going through consolidation. Alkt though looks like it’s forming a handle after already forming the cup.
Andy
Update: To elaborate, MarketSurge uses AI pattern recognition to mark up the bases. Sometimes there is no clear pattern and is it just a consolidation. I think in this case, the base is too short to be labeled as a cup or cup with base. I think it has to be 7 weeks old to get that label. A flat base can be 5 weeks, but this base is too deep (22%) to be a flat base.
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Stocks on my IBD watch list:
Pins
App
MFC
AVAV
VITL
Wing
Aspn
LLY
NVO
Andy
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Martin Marietta (MLM) stock gained 1.2% on Friday to 610.43, decisively clearing the 50-day line, breaking a trendline and short-term highs, all offering an early entry. MLM stock has a new flat base with a 626.67 buy point. Martin Marietta is benefitting from a U.S. infrastructure boom, with earnings growth ramping up sharply. Revenue growth has been slow, with an outright decline in the latest quarter.
Pete sold when the market got shaky, but may get back in depending on cash available. I think this has good long term prospects with the huge backlog of infrastructure spending.
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