Hey, Ross here:
And let’s start the new trading week with a review of how the markets are going – and the signs I’m waiting for.
Chart of the Day
The market continued its sell-off last week with the major indexes falling by over 2% on continuous selling pressure.
I commented last week that “leadership was failing.” And sure enough, the big-cap names that had been leading this rally were rolling over one-by-one. Apple (AAPL), Nvidia (NVDA), Super Micro (SMCI), MongoDB (MDB), Broadcom (AVGO) and several others had breached their 50-day moving averages and failed to bounce.
This week, the graveyard got bigger. Micron Technology (MU), Palantir (PLTR), On Holdings (ONON) and even Bitcoin joined the ranks of broken leaders.
Even Alphabet (GOOG), which has arguably been the strongest name during this pullback, is beginning to give up ground and break the low of its base (see chart).
What started as a shallow retracement is quickly becoming a full-blown failure in growth stocks.
The culprit? Take your pick.
Some say the rise in 10-year bond yields is to blame. Others are pointing their finger at China and the real estate bubble bursting over there.
But at the end of the day, it doesn’t really matter why stocks are falling. All that matters is they are.
What does that mean for us as traders? Well, as I share in the Insight of the Day – it’s all about remembering what our “jobs” are.
Because if you don’t, then the biggest and fastest gains to be had from the AI revolution could pass you by.
Insight of the Day
Our main “job” as traders is to identify uptrends as soon as possible and press firmly on the gas.
That’s what we did in May and June – and the results were phenomenal.
We bought stocks like NKLA which went up 87% in 2 days, COIN which soared 46% in 7 days, HIVE climbed 51% in 15 days, NIO surged 44% in 23 days, and at least half a dozen other blockbuster wins.
The stock market is always in one of three states – an uptrend, a downtrend, or range bound chop.
Right now, however, that uptrend is over. I expect to see another start within the next 4-6 weeks.
I’m watching a few indicators – from Put/Call ratios to net new highs/lows – to get a better gauge on when the next uptrend will begin. These are the same indicators that had me shouting from the rooftops that this was a new bull market early this year.
Until then, I encourage traders using breakout strategies to be cautious. Trade small, if at all, until you start seeing progress in your trades.
And if you’re wondering what strategy I would recommend right now, the answer is this one.
Embrace the surge,
Editor, Stock Surge Daily