Tweetstorm: Weekend learning Ross haber notes part 2: @RichardMoglen did a fantastic job in this one. Relating concepts with charts is just so great.
Link:
Charts:
1. What a chart looks like 2. Then drop down to fundamentals 3. Earnings acceleration
2/ 4. Sales picking up
5 annual: earnings
Bill told: estimates are conservative
ROE: 17%
Institutions sponsorship: pickup
Insurance, cos, trusts increasing their sponsorship
Quality of them is also important
Top notch mutual funds buying it.
Idea is to ride their good tails.
3/
How many funds ?
-big sponsorship
-increasing for quarters
*How much as too much?
Use it as secondary indicator
Smart & successful funds
Not necessarily the funds own the stock it doesn't mean that manager is great.
4/
One can see triple digit earnings growth even 6 quarters after topping out.
Pay attention to where leading stocks are.
Are more groups under accumulation ?
Relative strength line definition: It just the plot of ratio of price of stock wrto NIFTY 50
5/
**Relative strength & relative strength line :
Divergence btwn price and relative strength line.
Relative strength line making new highs before price breaking out is strong one.
Stocks can fail breakouts for 3 times too. Can go ugly. Goes with personality of stocks.
6/
Tighter smoother patterns are good.
RS line making new highs before breakout of the IPO base.
Big vols+RSL(divergence)+IPO: super liquid high priced IPO works great. That's a big catch
Some serious edge here.
Put sell stop and its done.
7/
Re-breakouts has been working.
Break out of early stage base with all CANLSIM characteristics. It breaks out and not hit 7-8% SL 7 out of 10 times.
Best ones buy straight away with follow through with high vols.
Relative strength line into new high grounds is big thing.
8/
Screen: up on vols (most important)
Sort by relative strength and check the list.
Pattern->group rank
Mike webster: IPO U-turns are one of the most successful bases.
Relative strength rating + expensive current price.
Find a group that looks interesting
9/
Weekly: top 5 relative strength stocks in a group.
No of stocks in portfolio:
60-80% of portfolio in 2-3 points
Buy points, R:R has an egde then get in
Spread out to 6-8 stocks
Fewer the better
When everything goes good and u don't have money to buy more then 11-12 stocks
10/
Stock picking is not the hard part, risk and emotions management is. Position size is most important.
There is no one who hasn't gone through a tough time.
Let's not be more than 20-30% invested unless u make progress.
Unless u don't show progress then
Never add further.
10/
Don't average down when u r getting out from cash.
Sell down to the sleeping point. @RossHaber_ is simply amazing. Great learning from u !
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A lot of distribution days piled up in a short time recently. Pattern: Inverted Flag. A close below 17613 with above avg vols wud confirm a downtrend and the start of panic selling. Rather one can say it's at a major support zone.
NSESMLCAP: At a major junction. 2 weeks to decide
Important key: Major winners of the Covid rally are either in STAGE 3 or entered STAGE 4. Major tops are seen in many past winners, more tops coming soon. The next 2 weeks are very crucial. AUTO & INFRA to stand out in strength.
NIFTYAUTO: Some scope here. Many auto stocks are setup strong with major earnings this week.
Not listening to the market is a flaw
Listening to people, watching TV: Bad habits
Stage Analysis: Break the market into 4 stages. 1. STAGE 1 2. STAGE 2 3. STAGE 3 4. STAGE 4
2/n
Sometimes the simplest system is the best system.
Ideal buy point is when stock comes out of stage 1 & enters stage 2
Stage analysis works completely against the normal market participants
Psychology=Inverse(What needs to b done in the market)
Stages are determined wrto KMA
3/n
B.O. sud b accompanied wit vols
Establish position from stage 1 B.O and retest.
Look for stocks with no upward resistances
Bigger the stage 1 base the better
The sector is important: can dramatically improve returns
Check for 2 years of resistance.
TSLA, 2019(6 yrs base).
FAZE3: Real Round Cup & Base formation at the peak.
Outlook: AR2021
By Rule of 72:
At 18%, The Income wud double in 4 years.
The Income growth seems conservative.
Fundoos:
~Highest ever Quarterly revenues since inception.
~Topline & Bottomline Acceleration
~Seems to be a breakout in Earnings in the last 3 years.
~Being a small player seems to take the Margins hit.
Two things I have seen yesterday but not quantified yet.
1. Most of the NIFTY50 or biggies r below 50dma and looking to kiss 200dma.
But, the Index is hanging above 50dma for some strange reasons.
2.
Internally the stocks falling below 50dma in the whole universe has widened
There wud b tons of breakouts reversals to be seen.
Some choosy sectors/names would run.
Most good to great results r discounted specially in IT & PHARMA.Textiles stocks r giving fab results & the moves r discounting the earnings breakout above multi-year average.
Lastly, I am seeing vintage stocks or stocks with long bases which I have been tracking for long Breaking out now.
Case: TEJASNET
It has been in key list for way too long. Last 4-5 days r continuous circuits and cleared the trigger point convincingly.