Below is a MEGA thread containing the 100 greatest winners from 1880-2009 π
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Charts are sourced from none other than the GOAT William O'Neil's "How to Make Money in Stocks"
But first, why do these charts matter?
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They go back to 1880. This shows the timeless principles that we are using here. It is the law of supply and demand. These patterns work because they are the effect of institutional demand, not the cause.
This strategy is RESILIENT
If your goal is to identify stocks with big potential, you need to know what will drive prices up. Institutional demand is what moves prices. They are are the biggest buyers (and sellers) in the market. They want growth in earnings, sales and margins.
As WON says
"It is the unique combination of your finding stocks with big increases in sales, earnings and ROE + strong chart patterns revealing institutional buying that together will materially improve your stock selection and timing. The best pros use charts"
He was an elite trader who always brought unbiased and methodical analysis to the #fintwit community
Here are 25 important lessons he taught me, strictly through his tweets, in his honor
May his legacy live on forever π
1. To be a great trader, you must be open-minded and flexible when new technical information emerges. Throw your opinions out the window.
2. Breakouts will continue to work most of the time in a bull market because human emotions don't change.
3. Accumulation and distribution are clearer and more meaningful on a weekly than on a daily.
4. For the vast majority of traders, the most profitable method is to ride a trend. Once you are profitable doing this, you will forget about trying to pick tops and bottoms.
With solar names like $ENPH & $FSLR not looking great, who will be leaders of the next bull market?
One group in particular has been showing ALL the signs of leaders
I'll dive into this group in the thread below
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As @markminervini notes in his book, Trade Like a Stock Market Wizard, superperformance stocks very often come from 1 of 4 groups, and it seems like the potential leaders of the next bull market will be consistent with that model:
Drugs/medical/biotech $XBI $XPH
Why this group?
See the breakdown of the 99 RS names according to @MarketSmith below as of about 2 PM EST today
Over 1/3 of the top percentile of stocks in the market are in the biotech group (!!).
This group is overflowing with potential key leaders for the next bull market... so which ones?
$SPX (or $SPY) & $IWM are exceptionally weak at the moment
Working on a wedge breakdown
Not to mention $QQQ has BEEN weak this entire time
$ARKK has seen nothing but selling this year. This hasn't even touched the 200D since the market decline began late in 2021. It is so weak, it rode the 20D & 50D moving averages all the way down.
Have you heard great traders say "listen to price action" and "gauge feedback from stocks"?
Below is a thread on I will use the current setup in $PCVX to gauge the quality of the market environment this week
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If you follow @markminervini's strategy, you know 1 of the 8 superperformance keys is "trade small before you trade big"
This means you should be trading small positions sizes until individual stocks are giving you the positive feedback that it may be time to take on more risk
Regardless of the size we are trading, we know we are playing with probabilities and not certainties, so we always want to have the probabilities stacked in our favor.
Minervini refers to this concept in his book using a poker analogy - "wait for premium hands"
There is no hard and fast rule overhead supply. For something like $DRVN, the OS is many months back and wouldn't drastically affect price now. However, the odds of it at least pausing in the $30-34 level are decent because it isn't years away.
$GLNG is a good example of a setup that has a lot of OS to contend with that is close by. If this stock moves up through this base, the odds of it pausing out at least once is very high, because the supply is very close to current price action.
$CTIC is an example where overhead supply is very far away and would not necessarily have a huge impact on the current setup. Despite a big decline, the OS is years back.
KEY: The more time that passes, the more likely that previous supply has already come to mkt at some point.