“Ok thanks Charlie. I prefer to be more optimistic.”
Andy,
In my personal life, I’m an optimist, always smiling, always grateful for the blessings of each day, even the simplest things.
But in my financial life, I’m a perma-bear and totally suspicious and mistrusting, which is why I did well in the bond market. And that’s a generalization I think prevails.
Stock guys are optimists. Bond guys are pessimists.
Though I bought my first stock when I was ten, 97% of my money continues to be allocated to the income side of investing rather than the cap-gains side, not that I haven’t made some serious cap-gains from spec-grade bonds. (E.g., buy Xerox’s 8’s of '27 in the '08 '09 downturn at 34 and then calculate the return when you get called in '17. Ditto some Mich Tobbac zeros I got into way back when at 2 (or something similar, as did a friend) - and then get called some years later, at whatever the price was. But we made 300% (or similar) on that --admittedly highly speculative-- bet.
The conventional wisdom is that stocks pay better than bonds. They don’t, because they can’t, or else the arbs would step in. What pays is accepting risk. Stocks–on average-- are riskier than bonds. But just as there are junk bonds, there are junk stocks. In fact, the present market is overloaded with them, because prices have become so disconnected from fundamentals, the chief of which is a strong economy not fueled by excessive debt.
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I get it Charlie and I am not saying you are wrong. It’s ok to have different viewpoints. I could definitely wrong.
That is a great quote. I think I will use that thanks LOL
Andy
Andy,
It’s not a matter of either of us being right or wrong. It’s a matter working within one’s own personality, which is a factor most investors ignore. They see other people doing this or that and think they could do the same. Well, they can’t. Same-same with investor education. The classes and seminars all assume that people have the same hopes and fears and share the same level of greed, the same attention to detail, the same ability to process information, the same work ethic. Well, they don’t. Each of us is hugely difference by temperament and personal circumstances.
My own kids are a good example of this. My son works in the financial industry and has direct access to people like market strategist, Liz Sonders. But he has zero interest in investing and would rather be rolling a century on his bike with his buddies. So he does the dutiful, responsible thing of maxing his 401k and lets it ride, good markets and bad. My daughter, a Gulf War vet, is one of the most ruthless traders you’d never want to be on the other side of the trade of. Her track record of wins and losses is sterling. But she’d rather be on a long-distance trail for months at a time or out back in her garden.
Me? My engagement with markets began when I was five and my parents helped me set up a passbook savings account. That was 75 years and thousands of trades ago, and I know I haven’t begun to learn even 2% of what there is to know about trying to pull more money out of markets than one brings to them.
Great Uncle Jack lived to 103, his sisters until 109 and 111. So I might have another 20 years of investing ahead of me and time to run a few more experiments. (“God willing and the creeks don’t rise”).
Charlie
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Wow, that is my story too. I remember putting my allowance in the bank and the bank would update my passbook with the interest. I was amazed that someone would give me money for doing nothing. I asked for stock one Xmas when I was in high school, and that really got me going. My best friend and I first tried the Ben Graham value approach. I remember we would go down to Merril Lynch (or whatever it was back then) to see his broker uncle and laugh at the old men sitting there watching the slow ticker go by. IBM, MMM, Eastman Kodak, Merck… My first great learning experience was buying $2000 of Worlds of Wonder with the money I earned one summer. They had Teddy Ruxpin, the talking bear and it had more memory than the Radio Shack TRS80 my dad bought. What technology! It had to be a great stock. It went bankrupt and I lost it all. Technically I was broke 
It has been a long run, so hard to stop being involved. So here I am.
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I had a paper route at 6 years old. It was a family business handed down from kid to kid. At one time I had an evening and morning route. Saving money from the start and investing ever since. Love investing because there is always something new and interesting to learn. Plus it expands your life experiences if you do not allow yourself to be dogmatic.
Andy
Today was an expectation breaker for me. I expected that if NVDA went up, it would drag up the markets. Instead, the markets, and even an AI related stock like SMCI had ugly reversals. IBD lowers exposure from 80%-100%, down to 60-80%. I had sold one position in my IBD account before earnings and sold SCHW today as it got really ugly (only got a 2.65% gain out of it). I have selected 4 other candidates I will evaluate tomorrow. I am considering SARK (a short of AARK) as a hedge in IBD and Saul portfolios (I may sell a bit in Saul, maybe IOT if it falls below 21dma - Simon Sez it was a sell today).
IBD team always says “have a plan” and “take it day by day”
I will update my IBD charts with a note saying what my sell plan is.
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CAVA reported earnings last night and they appeared to be disappointing. The stock was down 6% after hours, but this morning it was only down 2% before hours. CAVA has now staged an upside reversal on strong volume. Bill O’Neil would say that shows strong institutional support and it should be bought. Therefore, I have added to my position. I now have a 50% position (cost basis) because my first buy was not a classic base and breakout, so I kept it low.
Appears that 21dma was decent support.
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Hey Pete I went and checked IBD’s numbers again today and they look like they are fixed. Could it just have been a glitch? I think I will watch them just to see if it happens again.
Andy
The Jesse Livermore “Shakeout +3” buy point explained by IBD…
Aggressive Shakeout + 3 Buy Point Offers Rare Cushion | Investor’s Business Daily (investors.com)
Pinpointing early buy points in base patterns is not really about getting in early in order to make those two or three extra points of profit. It’s really about building more cushion into your position.
That extra cushion helps when a stock pulls back to test support or retest a buy point, and a stock often does such things. You are less likely to see your buy point undercut by 7% to 8%, the sell rule that automatically ejects you from the stock.
An early buy point is risky, and the stock may fall apart and never break out. But if the stock breaks out, early buyers have the luxury of a shock absorber that helps keep them in the stock.
This is why the pioneering investor Jesse Livermore (1877-1940) identified and named the “shakeout + 3” technique. The pattern can provide alert investors an early side door into a double-bottom pattern.
The setup requires two lows: the second low cutting below the first. It also requires a high point in the middle, creating something like a “W.”
A typical double-bottom buy point would be the high of the center point. If the base forms a handle, then it’s the handle’s left-side high. In a shakeout + 3 entry, just add 3 points (dollars) to that left-side low and that’s your buy point. In higher-priced stocks, you might want to add 5 or even 10 points, rather than 3.
If adding three points puts you very near or above the standard buy point of a double-bottom, the trick doesn’t do you any good.
But if the corrections are deep, it could put you into the stock well ahead of the standard buy point.
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I was considering selling BAH and TW today at about break even. Market is looking a little weak and it doesn’t hurt to trim weak holdings as such. Something distracted me and I did not do it. I also failed to monitor HUBS after the CRM earnings disaster and I paid for that. I think I was in a daze today and feeling a bit sick. Ugh.
If PCE spooks the market I will be regretting this slip up.
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SPOT setting up in a base and has been on a long run since Dec 2022. It is making a profit and is the de facto streaming music service. Are we looking at a Netflix-like long run? The big bounce off the 50dma today could be an early entry spot.
ELF setting up in a base, possible early entry in the works. It was a SS buy for me recently. Would like to compound that with an IBD breakout.
I don’t know why I did not pull the trigger on VRTX yesterday. I stared at it, and it met the criteria. I think I was antsy about the current market fluctuations. I continued its strong breakout today and it too high for me to chase…
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I bought some more Hood today. I like the way it is setting up a shelf, I think the funds are starting to accumulate.
Andy
I agree that it looks good from many aspects and I should consider it. I would not say it is forming a shelf, but that it recently broke out and is still in the buy zone. If you bought it yesterday you got a good price. I regard a shelf as something much tighter than we are seeing.
We will want to see more consistency in earnings growth. Sales growth is looking good. As you annotated, it sold off in volume on earnings buy has stormed back with volume since. Therefore, that was a shake out that got rid of weak holders. If it had been an upside reversal (daily) from that sell off, it would have been an even stronger sign of support. On the weekly, the following week has a big upside reversal from the down earnings week.
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I’m watching Samsara for a buy. What do you think? It’s been trending in the 30-40 dollar range and one of the Saul posters said they have been trading it in that range…doc
edit: sorry, i just saw your post on the trading saul stocks thread
I consider a shelf just a consolidation pattern, what you are describing I would call a tight pattern. But that doesn’t matter, although it is important that we understand what each other are trying to say. I am really liking marketsurge just for the ability to find companies that I have been looking for.
Andy
I am worried about all the software stocks, they seem to be weak and keep selling off. It reports in 2 days and I wouldn’t buy in now, although it could shoot up I consider that a gamble. Maybe wait and see how it acts. The Revenue growth is in the 30 percent range which I consider good but the earnings are not so good. Also It looks like it sold off on heavy volume and going down.
Andy
Thanks for the heads up on the earnings report, I didn’t realize it was this week. On the other hand, a question would be does the SS system give you an indicator on the direction for the post earnings move? We don’t usually talk about the other factors that we all probably watch for when using SS. I think that’s one of the things that I appreciate about this thread - the learning aspect of the discussion that you all bring Andy, Charlie and Pete…doc
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Doc,
The old quip about “Buy the rumor. Sell the news” is the best way to manage earnings reports, no matter one’s trading system.
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RE: IOT - sage advice from Andy. This is an enterprise “software” stock (with hardware IOT devices like GPS trackers for truck fleets), and those are not doing well (CRWD reports tonight). All the earnings risk will be out after earnings. Chart is not pretty right now as Andy showed. Today it is down 2.26% on volume 48% higher than average (at this time of day for the last 50 days).
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