• Investing
  • Stock
Round Table Thoughts
  • Economy
  • Editor’s Pick
Home Stock Why We’re Going Higher And Two Necessary Steps To Become A Better Trader
Stock

Why We’re Going Higher And Two Necessary Steps To Become A Better Trader

by November 5, 2023
by November 5, 2023 0 comment
Share
0
FacebookTwitterPinterestWhatsapp

Trading isn’t easy. It requires knowledge, experience, patience, discipline, risk management, preparation, research, and sometimes just old-fashioned good luck! After recognizing several cautious signals back in July, EarningsBeats.com suggested exercising patience to get us through whatever lied ahead. Well, hindsight now tells us that it was a correction. From high to low, here are how our major indices and sectors fared:

Look at where the relative weakness was found throughout this correction. 3 of the bottom 4 sectors were defensive groups – XLP, XLRE, XLU. These are “safety” sectors. One aggressive sector (XLC) outperformed all others. Two others – XLF and XLK – were “middle of the pack”. This correction did NOT see a mass exodus away from aggressive stocks.

Before I go any further, let me show you the difference during the 2022 cyclical bear market. Here’s how our major indices and sectors performed from the start of this bear market in early-January 2022 through late-February 2022:

Check out the bottom index and also the 3 bottom sectors. Doesn’t that tell us a little different story? There was mass exodus OUT of key aggressive areas. Why? Because Wall Street had no interest in these groups and rotated away from them as the big firms saw further weakness ahead. That same message does not apply to this correction and that’s one big reason why I kept saying we were going to see a very strong Q4 once this selling ended.

Could last week have sent a more powerful message? Here’s how our 11 sectors performed during that massive buying spree:

So on the way down, the aggressive sectors held their own. But on the first significant rally, our 5 aggressive sectors – XLK, XLY, XLC, XLI, XLF – were all in the top 6 sectors. Only the ridiculously-oversold real estate sector beat these aggressive areas. Again, the story that this relative price action is telling us is that the prior selling episode was temporary is now OVER! It’s just a matter of whether you prefer to listen to CNBC or the charts. I’ll take the latter, thank you very much.

I wanted to give you the backdrop of the market environment the last 3 months – as I saw it. There are plenty of other signals I use to call likely market direction, but relative performance is a big one. Recently, I shared with members how difficult it’s been for me to trade individual stocks since July. I haven’t traded a lot, but when I have, it usually ended poorly. That changed in a big way this past week. I stuck mostly with ETFs tracking the major indices, but I re-introduced leveraged ETFs to take full advantage of last week’s surge. Patience is key to maximizing returns and outperforming the benchmark S&P 500.

My best individual stock trade last week was easily NVIDIA Corp (NVDA). There were 2 important developments that created an absolutely awesome trading opportunity. The first one was the hammer candlestick that formed on Tuesday:

A hammer with an intraday breakdown below key price support is powerful. But perhaps even more powerful is NVDA’s seasonality. As most of you probably know, I’m a stock market historian and am well aware of seasonal patterns on our major indices. Well recently, I decided to take it another step further and analyze key trends in many individual stocks. What I found was AMAZING! Perhaps the craziest stat I found on NVDA is that it LOVES its earnings months. That sets it apart from most large cap stocks, because most large companies report quarterly results in the first month of each calendar quarter. So the norm is to report during January, April, July, and October. But NVDA is different and reports during the second month of every calendar quarter. That means its earnings are released during February, May, August, and November (green-shaded areas above). Of all the individual stocks that I analyzed, NVDA had the strongest average annual return at 59.83%. That’s amazing in itself, but listen to this. NVDA’s annualized return for its 4 earnings months are its 4 best of the year. Check out these annualized returns:

February: +82.25%May: +117.69%August: +80.31%November: +96.89%

Sounds like 4 pretty decent months to own NVDA historically. Knowing this information and then seeing that October 31st hammer at major price support and just before its historical November strength suggested an excellent time to enter this trade. So I entered. NVDA shot up nearly 50 bucks over the past three trading days. That’s the potential power when you combine (1) a bullish technical setup with (2) a bullish seasonal period. There are also bullish tendencies for ALL stocks during the early part of calendar months.

Listen, EVERY SINGLE TRADER should know basic historical tendencies regarding the monthly calendar. It will help in your trading. You’ll also find these trading patterns to be simply amazing! And many of you have been loyal supporters of mine and EarningsBeats.com over the many years that I’ve writing here at StockCharts.com. So I’d like to make you a one-time FREE offer to download “Bowley Trends Part 1: Long-Term Trends Since 1950”. Keep it as a personal gift from me, a thank you for your readership here in Trading Places. CLICK HERE to immediately download your free copy!

Happy trading!

Tom

You Might Also Like
  • Time to Talk 6-7 Year Market Business Cycles
  • Stock Market Fallout: How To Tweak Your Investment Strategy
  • MEM TV: Nasdaq Flat But These Top Areas Outperform!
  • Two EASY Ways to Find the Strongest Stocks in Seconds
Share
0
FacebookTwitterPinterestWhatsapp

previous post
Ilhan Omar criticizes US policy toward Israeli PM Netanyahu: ‘Doesn’t add up’
next post
Bonds Got Clipped. Now What?

You may also like

The Halftime Show: Inflation Back in the Driver’s Seat

February 14, 2024

Check These Out: Buyable Pullbacks Under the Surface!

November 20, 2023

Tips n’ Tricks to Instantly Enhance Your Chart Annotating

June 2, 2023

Precious Metals and Miners Ready to Rally

May 30, 2023

The 4 Best Tech Stocks to Watch Now!

June 27, 2024

The July 6-Month Calendar Range — SPY, QQQ, IWM, TLT

July 27, 2023

The Impact of Using Different Benchmarks for RRG!

July 16, 2023

Dow Theory Bull Confirmed! What Happens Next?

July 16, 2024

The Five Ratios ALL Investors Should Follow

August 25, 2023

1960s Analogue Sees Inversion in 2023

December 8, 2023

    Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • UnitedHealthcare sued by shareholders over reaction to CEO’s killing

      May 8, 2025
    • The Unpredictable Stock Market: How to Make Sense of It

      May 8, 2025
    • AMD CEO calls China a ‘large opportunity’ and warns against strict U.S. chip controls

      May 7, 2025
    • NBA star Russell Westbrook launches AI-enabled funeral planning startup

      May 7, 2025
    • Use This Multi-Timeframe MACD Signal for Precision Trades

      May 7, 2025

    Popular Posts

    • 1

      Trump-era China sanctions ended by Biden may be...

      June 27, 2024 2,630 views
    • 2

      Walz’s honeymoon with China gets fresh scrutiny as...

      August 9, 2024 2,339 views
    • 3

      Biden appointee played key role in recruiting Chinese...

      June 25, 2024 2,320 views
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful...

      July 10, 2024 2,302 views
    • 5

      Harris VP pick spent years promoting research facility...

      August 29, 2024 2,185 views

    Categories

    • Economy (7,009)
    • Editor's Pick (2,065)
    • Investing (538)
    • Stock (2,529)

    Popular Posts

    • 1

      Trump-era China sanctions ended by Biden may be revived under new House GOP bill

      June 27, 2024
    • 2

      Walz’s honeymoon with China gets fresh scrutiny as Harris camp blasts ‘lying’ critics

      August 9, 2024
    • 3

      Biden appointee played key role in recruiting Chinese businesses to Delaware: ‘Longtime friends’

      June 25, 2024
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful of Chinese spy threats

      July 10, 2024
    • 5

      Harris VP pick spent years promoting research facility that collaborated with ‘Chinese military company’

      August 29, 2024

    Latest News

    • UnitedHealthcare sued by shareholders over reaction to CEO’s killing

      May 8, 2025
    • The Unpredictable Stock Market: How to Make Sense of It

      May 8, 2025
    • AMD CEO calls China a ‘large opportunity’ and warns against...

      May 7, 2025

    Categories

    • Economy (7,009)
    • Editor's Pick (2,065)
    • Investing (538)
    • Stock (2,529)

    Disclaimer: RoundTableThoughts.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2024 RoundTableThoughts.com. All Rights Reserved.

    Round Table Thoughts
    • Investing
    • Stock
    Round Table Thoughts
    • Economy
    • Editor’s Pick

    Read alsox

    Stocks and Bonds SOAR After October...

    November 14, 2023

    Market Rotation and Cap-Weight Dynamics: A...

    February 21, 2025

    DP Trading Room: On-Balance Volume (OBV)...

    April 1, 2024
    Sign In

    Keep me signed in until I sign out

    Forgot your password?

    Password Recovery

    A new password will be emailed to you.

    Have received a new password? Login here