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DarterBlue

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An Amazing Bull Market Leg: On the evening of April 6, 2020, I posted (the first on this thread) that the market had clearly bottomed and that at least for the next three months higher prices were ahead. Sure, this was not the absolute bottom. That was put in on March 23. However, my style never catches the absolute bottom, as to me it is way too soon, even if there is a day of climax selling, to make that call on the day the bottom is made. Thus, I wait for a day of confirmation  which should follow within two weeks or less of the initial bottom. 

When I made that first post, I had a high degree of conviction that we were going to have a solid leg up. So, I began making long purchases the next day. What I did not know, was the extent of the strength of the move that lay ahead. As up legs go, this has got to be one of the strongest in market history in terms of the rapidity with which the headline indices regained lost ground. That it has done this in the context of a healthcare crisis and evidence of societal breakdown, is even more amazing. It is little wonder that many veteran, respected market prognosticators and money managers, missed this bull leg in whole or in part. I did not miss it because although I use both technical and fundamental indicators to guide my decisions, when they are in conflict, I go with the technical indicators, of which the most importance is price. 

The current move has now exceeded three months. And, although there have been some warning signs, particularly in June, on balance the trend is still in favor of the bulls. During this time I have had a good run, making a year's salary (based on my last employer) in a quarter. It would be sweet if this continues through the rest of the year from a financial standpoint. Will it? I don't know. And this is why I must monitor my indicators and the overall market action daily. You want to get as much of the run as possible without getting caught holding the bag when the lights are turned off. When you can do this, that is the hallmark of a disciplined trader.

Never get euphoric, always be humble, keep your eyes on the door, but hold your positions if the green light still indicates so.

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Jessie Livermore: This dude traded the markets in the early years of the 20th century. The book Reminisces of a Stock Operator is reputed to be his biography. Livermore cut his teeth in the Boston bucket shops (elicit trading floors) as a teenager before graduating to the NYSE as an adult. He is, perhaps, the greatest technical traders of all time. From a poor background, he made, in today's money, hundreds of millions, if not billions trading the markets over the duration of his career. Unfortunately, he had an achilles heel. He did not manage his risk consistently well. As such, he busted out at least three times during the course of his trading career. He recovered from the first two. Unfortunately, the third time, rather than being a charm, was too much for him to take. He committed suicide. 

The above brief information is presented as a cautionary tale for all aspiring traders. If you don't manage your risk, you could get literally taken out. I would highly recommend the purchase of the Livermore biography. While it was written almost a hundred years ago, it is a relatively easy read, provides sound information on how to approach trading, and chronicles, unfortunately, his ultimate demise. 

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Earnings-The Keys to Success: The largest fundamental factor affecting market price of a company's stock are earnings. Now, to be clear, it is not the actual amount of earnings, it is the following three factors: 1. The rate of earnings growth. 2. The extent to which reported earnings beats estimated earnings. 3. The third factor relates to the extent and frequency that analysts revise earnings estimates upward.

Huge winners usually (more than 80% of the time) benefit from rapidly growing earnings, constant upward revision of earnings estimates, and constantly reporting earnings in excess of current analyst expectations. When a company can achieve this kind of earnings success over multiple years, its stock is almost certainly destined to double, triple and then double again. If you are fortunate enough to own one of these companies, provided the economic backdrop is favorable or at least neutral, it behooves you to try and hold it for more than a year. You will almost certainly be well rewarded. You can take that to the bank. 

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Wide and Loose Continues: As I type this, the NASDAQ has just wiped out a 200+ point gain. TSLA, one of the poster children of this rally has given up a 14% gain and is now down 3%. When indices and individual stocks trade wide and loose for several days, it is generally not the best technical sign. 

To be continued .. 

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16 minutes ago, DarterBlue said:

The entire stock market seems to be topping. Today has been the worst day technically since June 11. 

I pulled out. I was about even. The best area is tech and those prices are too high for me. 

Seattle is about to slam amazon in taxes. So I'm curious to see what happens there 

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18 hours ago, imaGoodBoyNow said:

@DarterBlue @HSFBfan@rockinl @FootballGuy @golfaddict1 
 

im pumped for tomorrow, we will all have a blessed day 

 

Well, unless you were short (I know you don't do that) you probably did not have a good day. I know I did not. Midway through the day, I was having a good day. But that changed real quick. 

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7 hours ago, imaGoodBoyNow said:

🚨

 

 

11 minutes ago, DarterBlue said:

Well, unless you were short (I know you don't do that) you probably did not have a good day. I know I did not. Midway through the day, I was having a good day. But that changed real quick. 

I knew late last night it was gonna be bad day

 

 

i did good on UAV and BOXL today, Drones and online education located in Georgia 

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Stocks closed lower with the exception of the DOW. In the process, the market staged a vicious reversal day. To make matters worse, volume rose on both exchanges, which was a clear sign of distribution. At the open stocks gapped up. All was well till the NASDAQ showed clear signs of cracking shortly after 2pm. Well the selling only picked up from there. At the close, the market ranged from a miniscule gain of .04% on the DOW, which had been up well over 2% earlier on, to a loss of 2.16% on the NASDAQ 100. Earlier, both NASDAQ indices had been up over 2% on the day. However, once the selling started, it did not abate and accelerated into the close. Losing stocks led by margins of 19-11 on the NYSE and 23-11 on the NASDAQ. So, how do I view the day? It had no redeeming features. It was very bad. Let me elaborate. Intraday reversal to the downside, check. Selling on rising volume, check. S&P fills the island gap, bumps up against its highs of June 7th and then reverses to close lower, check. Leading stock TSLA gaps up and was up over 14% and reverses to close down over 3%, check. I could go on, but the point is clear. It was a bad day. And it came on the back of several suspicious days even as the NASDAQ worked higher to several all-time closing highs. I am reluctant to call a market top here, but damage has been done and another day like this may be the end of this great bull run, at least for now.

 On a personal note, I was going along without a care in the world between 1 and 2 pm. I was up well over $11,000 and all my positions except TEAM were up nicely. And then the selling started. At day’s close, all my positions were in the red. And, the highflying technology stocks I own were the worst losers. SHOP, TTD, TEAM and ZM all sucked wind. Some of them suffered significant technical damage. Moderate losses were sustained in LOW and LCII, while the MDY and S&P Call Options also sustained moderate losses. In the case of the S&P, though, it stung as earlier on the day, I was up over 20% on the day in them with a gain in excess of $4k only to see it turn into losses. I ended losing $17,619 or 3.05% on the day. This represented a swing of over $27,000 from peak to trough in my equity. It also represented by far the biggest daily loss I have sustained since I went long on April 7, eclipsing my loss of approximately $12,800 on June 11. In short, it sucked! If tomorrow is another negative day, I will seriously consider lightening my positions before day's close. 

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Financial Futures: As I type this, US futures are mildly positive as they attempt to rebound from the stinging blow the market suffered yesterday. This is despite the fact that overseas markets in both Europe and Asia have been weak. Of course, this could all change significantly before the open as several large banks including, I believe, JP Morgan Chase, report before the opening bell. The best case scenario would be to have a calm day with the averages ending between +/- .5% of where they closed yesterday. However, I doubt this will happen and look for volatility to rule the day regardless of direction. 

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1 hour ago, DarterBlue said:

Financial Futures: As I type this, US futures are mildly positive as they attempt to rebound from the stinging blow the market suffered yesterday. This is despite the fact that overseas markets in both Europe and Asia have been weak. Of course, this could all change significantly before the open as several large banks including, I believe, JP Morgan Chase, report before the opening bell. The best case scenario would be to have a calm day with the averages ending between +/- .5% of where they closed yesterday. However, I doubt this will happen and look for volatility to rule the day regardless of direction. 

BOA just cut their dividend from 51 cent to 10 cent a share 

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Just now, HSFBfan said:

BOA just cut their dividend from 51 cent to 10 cent a share 

Not surprised. The latest bank stress tests, required the suspension of buybacks and in the case of Wells Fargo, the cutback of dividends. Chase already cut my credit limit in half though I have never, ever missed a payment in 18 years with them. Banks in general are not as solvent as they would have us believe. 

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Just now, DarterBlue said:

Not surprised. The latest bank stress tests, required the suspension of buybacks and in the case of Wells Fargo, the cutback of dividends. Chase already cut my credit limit in half though I have never, ever missed a payment in 18 years with them. Banks in general are not as solvent as they would have us believe. 

Banks gyms airlines etc might be dead in the water 

Only thing left is tech. Because no matter how poor we get we apparently will be able to buy a 1000 dollar cell phone and a 80000 dollar tesla 

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11 minutes ago, HSFBfan said:

Banks gyms airlines etc might be dead in the water 

Only thing left is tech. Because no matter how poor we get we apparently will be able to buy a 1000 dollar cell phone and a 80000 dollar tesla 

The country is not poor. Most of its people are. There is a difference. And it explains why tech can and will continue to do well while companies that cater to the rest will do poorly.  

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