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Good evening, and welcome to this week’s edition of Stealth Trades!

For two weeks I have been saying the low is in; that the bear market is over, and this is the time to buy.

Today I’m going to lay out my case with 4 charts.

These show conditions we typically see at the start of bull markets. And all of them are appearing right now.

First, at the bottom of a bear market, this is generally a big up day on heavy volume with a close near the high of the day. It is a signal that institutions are piling back in heavily.

On April 9^th, we got that signal…

We saw similar price action at the low of the 2022 bear market, the 2020 post-COVID bear market, and the one in late 2018 (see below).

Second is the put/call ratio. The P/C ratio is a contraindicator.

You see, the average investor is not very good. They buy the top, and they sell the low. Their emotions make them sell at the worst possible time.

The put call ratio is a measure of this emotional buying and selling. When the reading gets above 1.0, it means speculators are betting big on stocks going down, and that is typically the best time to buy.

In the chart below, you will see the S&P 500 index on top of the Put/Call Ratio on bottom. Notice how spikes above 1.0 came within days of market lows.  

The April 7 reading of 1.18 is playing out just as expected.

Another thing we need to keep our eyes on is the Net New Highs/Lows indicator. This measures how many stocks on the exchange made a new 52-week high that day versus the number that made a new low.

In a healthy market, this number is positive – reflective of broad participation in the market. When it is red (especially very red), there is heavy selling.

Today, for the first time since February, we are again painting green. This means there have been 3 days in a row of net new highs.

This last chart comes from a talented trader named Matt Caruso.

On top is a market trend model looking at a number of breadth indicators that has finally turned bullish.

Beneath that, an inverse JNK moving average which serves as a faster-moving NFCI proxy shows loosening credit conditions and improved liquidity over the last several days.

The bottom of the chart shows the Up/Down Volume Ratio which is finally getting back above 1.0.

There are no guarantees in the stock market. And President Trump is a bit of a wild card. But these bullish metrics have been found at the start of every market recovery in the last decade.

Which leads me to the conclusion that it is time to buy.

Best wishes for your trading,

Good evening, and welcome to this week’s edition of Stealth Trades!

A lot of investors are looking for stocks to buy on the cheap after the market pullback.

That’s good. That’s what they should be doing. 

95% of the top-performing stocks of the last century started their big move after a bear market or correction. So, this is the perfect time to be shopping for stocks.

And one of the best indicators of a future top performer is divergence.

Divergence means the stock is doing something different than the rest of the market. In this case, that means going up while everything else is going down.

I’m not talking about defensive stocks. Names like TJ Maxx and Allstate insurance are only holding up because scared portfolio managers are flooding into companies they believe will be less affected by a recession.

No, what I’m talking about are growth stocks that are somehow surging in what has been one of the ugliest market environments.

One of those stocks is Celsius Holdings (CELH). 

Celsius develops, markets, sells, and distributes functional beverages and liquid supplements, including post-workout energy drinks and protein bars. 

Its main product is a line of energy drinks. The company now ranks as the #3 energy drink brand in the United States. 

It now produces everything from canned drinks to powder additives and expanded into 6 new countries in 2024.

Like many growth stocks, CELH witnessed tremendous growth during the post-COVID bull market. The stock soared an astounding 3,900% from 2020 through the 2021 peak.

​​ The biggest decline in the stock took place in May of 2024 where, after topping out, price fell 78% from its highs.

In its quarterly report, Celsius reported higher than expected revenue but lower earnings. The top line beat was not enough to keep the bull train chugging. Instead, the stock gapped down and immediately began to trend lower.

CELH bottomed in February, and the recovery seems to finally be underway. After chopping around near the lows for six months, CELH is now up over 80% in the last two months.

Interestingly, this powerful move has taken place while the rest of the stock market has cratered. The international trade war that has cast doubt and uncertainty on global markets is not affecting Celsius stock in the slightest. 

With CELH now trading above the consolidation zone where it spent the last six months, there is a good chance that this will be the start of a new Stage 2 uptrend. And this is where the real gains are made.

The stock now trades above its 10, 21, and 50-day moving averages with all three trending higher. It has also reclaimed its 200-day moving average which is the proverbial line in the sand that separates a stock being in a long-term upward or downward trend.

Historically, the biggest gains have come following pullbacks and bear markets. Stocks showing clear divergence and rising against such downward pressure are often the biggest movers in the next bull market. And Celsius is showing all the signs of just such a future winner.

Here is how I would trade it…

Stock Trade: Buy Celsius Holdings (CELH) stock at the market, then place a sell stop order at $31.00 to risk 15% on the trade. 

Option Trade: Buy the CELH Jul18 $40 call options (.CELH250718C40) which currently trade for around $300 per contract.

Best wishes for your trading,

Good evening, and welcome to this week’s edition of Stealth Trades!

In all likelihood, the low of the bear market is in.

After an EXTREMELY volatile week, which saw daily swings of 8-10%, the Nasdaq finished with a 7.51% gain.

Over the last couple weeks, I have been holding emergency webinars to address current conditions surrounding tariffs and outline what I was looking for to signal an end to the selloff.

And on Wednesday, we got it.

Look at the daily chart below…

I have drawn an arrow pointing to Wednesday.

In a single day, the stock market gained 12% and closed within spitting distance of the highs.

Historically, this has been the sign that the bear market is over.

Go back and look at 2020 and 2022. On both occasions, you will see a day – at the low – that experienced huge buying. In each instance, the market gained 7% or more, closed near the highs, and experienced well above average trading volume.

That is what we saw on Wednesday.

This is a sign that big institutions are piling back in. It means that negative news and the fear of it has been fully priced in.

Wednesday’s surge was caused by Trump’s announcement that he would be pausing all international tariffs with the exception of China.

In the two days following this event, we saw China not only refuse to back down but also increase their tariffs on US goods.

This was the market’s greatest fear. Yet, on the realization of this scenario, stocks failed to sink lower and come anywhere close to Monday’s lows.

This, to me, signals that the bloodbath is over. I would be shocked if the market broke this week’s low any time soon.

I am not saying it will be smooth sailing from here. It may take several months before the market makes new highs. But I am not looking for stocks to buy.

Short-term shocks surrounding inflation, rate cuts, and the ongoing trade war with China will no doubt result in a higher volatility environment than what we experienced over the last few years. Tweets and Truth Social posts will still cause quick reactions in the equity market.

But if you have been looking for a sign to get back in, this… at least for me… is it.

Best wishes for your trading,

Good evening, and welcome to this week’s edition of Stealth Trades!

President Trump just wiped out $4 trillion of wealth in 48 hours. His tariff plan – announced Wednesday afternoon – led to a 10.5% decline in the Nasdaq index in less than 48 hours.

That is the biggest 2-day drop since COVID in March 2020.

It was an absolute bloodbath for stocks this week, and Donald Trump is 100% to blame.

Now look… I am not a Trump hater. I voted for him. I have supported all of his economic policies. But what I saw this week was one of the most reckless actions a US president has ever taken.

The premise was simple – other countries impose bigger tariffs on us than we do them, so we are going to level the playing field. You have a 20% tariff on American goods, so we will put a 20% tariff on your goods. 

Perfect. Completely agree.

But Trump did not follow this logic.

During the rose garden press conference, President Trump held up this chart showing each country’s tariff on US goods in one column, and the rate we would be charging them in return.

Retaliatory tariffs from the US were to represent 50% of what that nation charged on US imports.

But here’s the problem…

He made up the numbers.

China does not have a 67% tariff on US goods. The blended rate is just under 20%.

The EU does not impose a 39% tariff on us. They charge 2.5% and 10% on cars.

And Vietnam certainly does not slap a 90% import fee on us.

So, where did these numbers come from? Here is Trump’s formula for determining a country’s “tariff” on US goods:

Trade deficit / US imports

President Trump is trying to penalize countries that export more goods to the United States than they import from us. Here’s the math:

In my opinion, this logic is flawed. Of course we are going to have a trade deficit with Vietnam. The per capita GDP in that country is $4,282. The average Vietnamese factory worker earns $1.22/hour. That is the entire reason American companies have clothing, shoes and other goods made there – it’s cheaper.

By contrast, the per capita GDP in America is $82,769. We have immensely more disposable income. And naturally, we are going to purchase more goods than our Vietnamese counterparts.

So, Trump’s plan is to slap a 46% tariff on these goods when they enter the US.

Look… I’m a capitalist. I am not some bleeding-heart softie hoping the whole world will hold hands and sing Kumbaya.

But this plan just doesn’t make any sense. And no one saw it coming…

This is what happened to stocks after it was announced Wednesday afternoon.

The indexes were down 5% in just over an hour. When the market opened up Thursday morning, it sold off some more.

Friday morning, China announced a retaliatory tariff of 34% on US goods.

Trump claimed China charged us 67%. Clearly, they do not. Because this news triggered another massive selloff.

This is one of the ugliest environments for investors in years.

Will big opportunities be waiting on the other side? Absolutely! But in the meantime, this is a lot of pain.

I hope this is part of a bigger plan for the president. I want to believe that this is a calculated move, designed to either drive rates down and refinance the national debt at lower rates or bring world leaders to the table.

If his plan is the latter, this seems like the wrong way to go about it. But that’s just my opinion.

Hopefully we will see a resolution sooner than later. Once this uncertainty is behind us, the market will no doubt resume its march higher. But until I see signs that conditions are improving, my long exposure will remain minimal.

I held a special webinar Monday night covering the tools I use to time the market. I walked viewers through the metrics and indicators that signal healthy conditions.

If you missed that presentation, you should have received the recording. Please watch it. The model should be a big help to you both now and into the future.

To update those in attendance, the net new lows indicator remains deep in the red:

The best-performing sectors are still defensive areas:

And although NFCI did tick down on Wednesday, I will be shocked if it doesn’t jump substantially this week.

Do not be in a hurry to get back in the market. It is an hour until market close at the time of this writing, and the Nasdaq Composite is down 5% on the day, holding near the lows. That is NOT the sign of a market on the verge of recovery.

Best wishes for your trading,

Good evening, and welcome to this week’s edition of Stealth Trades!

I do not want to be the bearer of bad news.

I am an optimist by nature. I want to be bullish on the stock market whenever possible.

But right now, it’s not pretty.

There are 5 charts I look at to assess the health of the stock market. And right now, all of them look bad.

The net new highs/lows chart below shows how many stocks across a given index are making new highs vs new lows for the day. If the net number is positive, more names are making new highs which is typically reflective of a healthy market.

But right now, that is not the case.

For the last 27 trading days in a row, this metric has been negative – a clear sign of an unhealthy market and steady selling on Wall Street.

I also like to keep an eye on the NFCI reading. This indicator, which I detailed in last week’s email, reflects the liquidity of the market. A declining reading indicates loosening financial conditions and a rising one shows tightening.

Released once a week by the Chicago Fed, this number was unchanged this week. As can be seen in the blue line below, the National Financial Conditions Index continues to reflect a poor environment for equities.

The high yield index is another thing I like to keep an eye on. Unlike traditional interest rate yields, this index reflects risk as well. This is the rate typically charged to less secure firms where lenders are not guaranteed a return of their capital.

And as you can see, it continues to climb higher…

The put/call ratio is not delivering any hope either. Consistently high readings mean investors are increasingly bearish and buying put options at a higher-than-usual rate compared to calls.

While a short-term spike in the P/C ratio can indicate a potential turning point, steadily higher readings show broad bearish sentiment.

And finally, there’s the stock market itself. The chart of the Nasdaq index ETF below shows the rapid February selloff.

While it appeared that we could be finding a bottom, stocks collapsed this week to finish Friday with a nasty 2.8% decline.

Periods like this are unavoidable. Dips, pullbacks and bear markets are part of the game. I have no doubt that prices will be higher 6, 12 and 18 months from now.

But as traders, we must recognize when conditions are favorable and when they are not. And right now, they’re just not.

In my long-term account, I am 65% invested in cash. The other 35% is a mix of stocks and a few commodity ETFs holding gold (GLD), silver (SLV), copper (CPER) and natural gas (UNG). 

As soon as conditions improve, I will quickly and aggressively move more into stocks and buy at these reduced prices. But until then, I will remain conservatively positioned.

Best wishes for your trading,

Good evening, and welcome to this week’s edition of Stealth Trades!

Most people say it is impossible to time the market.

I disagree.

You’ll never get it perfect, but there are proven indicators that, more often than not, have identified turning points in the stock market.

I want to talk about one of those today.

It is called the NFCI which stands for National Financial Conditions Index. This figure, published weekly by the Chicago Federal Reserve, measures how readily money is available in the financial system.

It combines over 100 indicators like credit costs and loan activity into a single reading. A rising NFCI indicates tightening conditions while a falling value suggests easing conditions and better liquidity.

The higher the NFCI, the worse it is for stocks and the economy.

The chart above shows this reading dating back to the 1970s. Recessions are highlighted in grey and coincide with above average NFCI numbers.

But this index can also alert investors to short-term shifts in the market.

Here is a comparison of the last 8 months…

On top in blue is the NFCI. The Nasdaq Composite Index is displayed below in white.

Notice how periods where the NFCI Index was rising (tighter money conditions) led to dips in the stock market.

The opposite is also true. From August of last year through last month, loosening conditions led to higher stock prices.

Things flipped again in February, leading to a selloff over the last 6 weeks.

This inverse relationship has been maintained for several years…

A surging NFCI reading in 2022 coincided with the bear market.

And when this trend reversed lower, the stock market screamed higher.

The National Financial Conditions Index is not the holy grail. There are a few false signals here and there.

But when we combine this with other metrics like the net new highs indicator and the percentage of stocks above key moving averages, we get a pretty good idea of when we need to step on the gas and when it might be best to move money to the sidelines.

I won’t get too far in the weeds in this email, but I will be going over this in more detail in Monday’s LIVE Stealth Trades meeting over Zoom at 9am ET.

If you are reading this email, you have access to that session. You’ll get an email Monday morning with a link to join.

I’ll see you there.

Best wishes for your trading,

Good evening, and welcome to this week’s edition of Stealth Trades!

Stocks surged on Friday for some welcome relief after a vicious down week.

Is this the bottom? Is it time to start buying stocks?

I think it is worth a shot. And here are my 3 favorites right now.

Each of these stocks has it all – good technical setup, strong sales and earnings growth, and high relative strength.

If these trades don’t work, nothing is going to.

ACM Research (ACMR)

This semiconductor stock has held up better than any other over the last three weeks. Not only is it not going down, but it is in fact rising.

ACMR carries a 3-month relative strength rating of 97/100, and it just broke out hard from a consolidation wedge on above average volume.

This stock wants to keep running.

Alignment Healthcare (ALHC)

The indexes may be down this month, but no one has been selling ALHC. There is clear resistance at the $16 level following a 3-month shallowing pattern.

Big sales growth, big earnings growth, and an RS line making new highs before price…  This is exactly what I want to see in a breakout setup.

Root, Inc (ROOT)

ROOT is an insurance company, which is one of the top performing sectors right now. The stock is emerging from a classic cup-and-handle pattern.

Shares gained 13% today on above-average volume and closed at the high tick. This is exactly what you want to see on a breakout.

The fundamentals are mind-blowing as well. The firm is growing sales and earnings by more than a hundred percent a quarter. It is no wonder the stock has been a 98^th percentile performer over the past 12 months.

ROOT is up 250% over the last year and showing no signs of slowing down.

Best wishes for your trading,

Good evening, and welcome to this week’s edition of Stealth Trades!

Trump’s tariffs continue to wreak havoc on the stock market.

Over the last three weeks, the Nasdaq. Index is down more than 10% – officially putting, making this a market correction.

Out of 654 stocks with a market cap of $10 billion or more, only 23 were up at least 5% on the week.

Those stocks are listed below.

Several of these stocks are headquartered outside the United States. Chinese companies like Alibaba, Baidu and Sea Limited are unlikely to be affected much by Trump’s new tariffs against Mexico and Canada.  PDD is a department store chain based in Ireland.

But domestically, many of the biggest growth names of the last two years have been taken out behind the woodshed.

Nvidia is down 28% from its January highs, wiping out nearly a trillion dollars in value in two months.

Astera Labs (ALAB) – which also peaked in early January – is down 57%. Applied Optoelectronics (-65%), Intuitive Machines (-64%), NuScale Power (-54%), Applovin (-49%), Marvell Technology (-45%) and countless other 2024 leaders have been pummeled.

One of the hardest things to do as an investor is to buy in the face of a selloff.

Walter Deemer is one of the best technical analysts who ever lived. And he has a quote that I love. In fact, it is the title of his book…

“When it comes time to buy, you won’t want to.”

Right now, I don’t want to buy. But historically, that is the best time to do it.

Last week I shared a chart of the S&P 500 highlighting where I wanted to buy the market. Here is an updated version:

The index is right in the middle of my Buy Zone. And despite my inclination to do otherwise, I plan to add money to my longer-term accounts here.

After such a rapid selloff, the market is highly oversold. I expect to see a big bounce next week. Only time will tell if that turns out to be short-lived.

Have a great weekend.

Best wishes for your trading,

Good evening, and welcome to this week’s edition of Stealth Trades!

It was a bloody week on Wall Street.

On the heels of a nasty selloff last Friday, stocks continued to push lower all week. In 6 of the last 7 trading days, the S&P 500 index broke the low of the prior session.

Declines like this or normal. In fact, they are part of the process.

Stocks don’t go straight up. After strong bursts higher, there tend to be short-term declines while the market is digesting the move and weak-handed investors take profits.

This creates the stair step pattern we often see on stock charts. It is also the reason so many investors love to “buy the dip.”

Dip buying is easier said than done. While it may look easy in hindsight, buying in the midst of a vicious decline is anything but easy.

So, instead of trusting my gut when emotions are high (never a good idea), I like to map out buy levels in advance. These are pre-determined price zones where I am committed to adding to my account if and when that price is hit.

But where do you buy?

Right now, we are in a clear and undisputed bull market. The average bull market “dip” is usually 8-12%. But I want to find some sort of technical level that could serve as support to back up my buy.

Here’s what I’m looking at now…

In the daily chart above, I have drawn a box around my Buy Zone for the S&P 500 index. My goal is to add on in the 5600 – 5750 range if given the opportunity.

This level is significant for a few reasons. First, it coincides with the 200-day moving average (white line on chart) where stocks tend to defend their uptrend.

There are also several previous support and resistance levels in this region which I have drawn as dashed lines.

Look at the middle of the three lines. See how there was resistance in July and August, preventing the market from going higher? Once we broke through, it then served as support in September, October and November.

This is telling us that the area is significant. It is a magnet for buyers and sellers and, if reached again, will likely see buyers stepping in once more.

Buying the dip is more of an art than a science. Don’t try to nail it to the penny. But the simple exercise of establishing where you will buy… in advance… before the market gets there will make it much easier to pull the trigger when the time comes.

Best wishes for your trading,

Good evening, and welcome to this week’s edition of Stealth Trades!

What is the hottest sector of the market over the last quarter?

It’s not semiconductors… or AI… or cloud computing…

The best-performing sector right now is eSports.

Gaming is an often-overlooked corner of the market since most of us are well past our video game days. But there is an entire generation spending billions in the online gaming space. Even the world’s richest man – Elon Musk – has professed his love for online multiplayer games.

The chart below shows ESPO – the VanEck Video Gaming and eSports ETF – against the Nasdaq 100 index over the past twelve months.

The outperformance is staggering.

Even in a strong bull market year led by the tech sector, ESPO delivered more than double the gains.

A lot of this performance came from a single stock – Applovin (APP). APP stock is up over 700% since last February.

Full disclosure, I hold a position in APP. My quantitative model began buying the stock in my personal account last January at just under $38 per share. It added more in March at $63 again last month at $310. As of this morning, it was trading for $450.

But Applovin is not the only big mover in this under-the-radar group.

Take-Two Software (TTWO) – the video game developer behind Grand Theft Auto and Red Dead Redemption – is also seeing upward momentum.

Sea Limited (SE) is also on a tear…

You could also look at Tencent (TCEHY) which is the dominant name in the China market, but personally, I try to avoid Chinese stocks.

Call me crazy, but buying stocks in a socialist economy with a history of nationalizing successful firms is a little too risky for my taste.

The previous names I mentioned (APP, SE and TTWO) are all in nice clean uptrends with no signs of slowing down. But if you wanted to be more tactical, there are two others you might consider.

Roblox (RBLX) is a stock we have been bullish on since mid-2022. The share price has doubled over the last couple years and is now in a confirmed Stage 2 uptrend.

Thanks to disappointing numbers released earlier this month, the stock pulled back to the $60 area. It now sits on the previous break level from December as well as its 50-day simple moving average.

This, to me, is a low-risk entry point. This is where buyers should step in and support the stock if the uptrend is to resume. Traders should be able to risk less than 10% by buying here for a great pullback buy.

Another stock to keep on your radar is Electronic Arts (EA). “E… A.. Sports… It’s in the game.” (If you know you know.)

This stock has been a laggard in the gaming sector, but it is showing signs of coming back to life.

After a hideous start to the year, EA seems to have found a bottom in the $115-$130 range.

The stock is now forming a base as shown in the yellow box above, and a strong move through the top of this range could be the start of a new trend higher.

The AI theme is getting a bit long in the tooth. And while we are still in the early stages of application in the real world, the investment angle has gotten a bit overcooked in my opinion.

This is a good time to be looking for new, emerging sectors, and eSports is a clear standout to me.

Best wishes for your trading,