💭
Besides the more obvious trend analysis techniques a great way to determine the health of the market is by looking at the breakout success of emerging leaders. By “breakout success” I am referring to when a stock with excellent fundamentals passes through a buy point after a consolidation pattern and continues to further gains.
🔻
During a failing market doomed to enter a difficult period these breakout stocks often immediately reverse and hit your stop loss. This is due to the lack of buying interest by institutional money (e.g., hedge, mutual and pension funds). A major reason for this lack of interest is due to a low cash holding of the funds, as they are almost entirely invested. This poor breakout success environment was rife toward the end of 2021 and the beginning of 2022. Thus, pre-empting the following bear market. The best way to make profits in this case is market wide shorting (
NDX
and
SP500
).
🌠
However, exactly a year later these conditions have flipped. I have noticed that breakout success is becoming more common and expert stock picking has once again become profitable. This is likely a result of the high cash ratio of institutional investors after a year of selling. Although this is just one angle to assess market health this is encouraging for the prospect of 2023.
Recent examples of this in my own portfolio have been
CROX
(mentioned in a previous post) and CPRX. @CPRX (Catalyst Pharmaceuticals Inc) recently broke free of a triangle continuation pattern on high volume and has since raced forward to the follow up buy zone. A clear sign of breakout success. See
CPRX
graph below.
🛀
It should be noted that it is still early days so positions should be entered with caution akin to getting into a very hot bath
🎢
2023 is shaping up for a good one, find me on Etoro (JM15931) and come along for the ride!
Besides the more obvious trend analysis techniques a great way to determine the health of the market is by looking at the breakout success of emerging leaders. By “breakout success” I am referring to when a stock with excellent fundamentals passes through a buy point after a consolidation pattern and continues to further gains.
🔻
During a failing market doomed to enter a difficult period these breakout stocks often immediately reverse and hit your stop loss. This is due to the lack of buying interest by institutional money (e.g., hedge, mutual and pension funds). A major reason for this lack of interest is due to a low cash holding of the funds, as they are almost entirely invested. This poor breakout success environment was rife toward the end of 2021 and the beginning of 2022. Thus, pre-empting the following bear market. The best way to make profits in this case is market wide shorting (
NDX
and
SP500
). 🌠
However, exactly a year later these conditions have flipped. I have noticed that breakout success is becoming more common and expert stock picking has once again become profitable. This is likely a result of the high cash ratio of institutional investors after a year of selling. Although this is just one angle to assess market health this is encouraging for the prospect of 2023.
Recent examples of this in my own portfolio have been
CROX
(mentioned in a previous post) and CPRX. @CPRX (Catalyst Pharmaceuticals Inc) recently broke free of a triangle continuation pattern on high volume and has since raced forward to the follow up buy zone. A clear sign of breakout success. See
CPRX
graph below. 🛀
It should be noted that it is still early days so positions should be entered with caution akin to getting into a very hot bath
🎢
2023 is shaping up for a good one, find me on Etoro (JM15931) and come along for the ride!