Weekly Update: I hope you’ve been paying attention
Good evening, and welcome to this week’s edition of Stealth Trades!
2023 is now half over.
And those sitting on the sidelines have missed some nice gains.
As of Friday morning, the Nasdaq is up over 30% year to date.
Hopefully you have been taking my advice and participating in the rally.
I have been bullish since January when the market gave us a breakaway momentum signal. I alerted members to it in the January 13 update:
I shared how statistics showed we were likely to see a big year in stocks.
And that signal has played out as expected…
I continued urging members to buy throughout January…
And February…
In March I brought your attention to the upside reversal in the Nasdaq…
This proved to be the best buying opportunity of the year.
And I have remained steadfast in my view that this was, in fact, a new bull market…
My outlook has not changed.
We are at the beginning of a powerful bull market that will continue to propel stocks higher for likely the next couple years.
Many investors make the mistake of waiting for the macro outlook to improve before investing. They are under the false impression that the economy leads the stock market.
Nothing could be further from the truth.
In fact, it is just the opposite.
Go back and look at every bear market throughout history. Stocks have ALWAYS bottomed long economic conditions improved.
As legendary investor John Templeton once said, “Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria.”
In other words, once the general public is finally optimistic, the bull market is coming to an end.
During the great financial crisis, stocks bottomed in March 2009 – right when things were at their worst. By the time employment and GDP numbers were healthy, the market had already doubled.
It was the same with the COVID selloff of 2020.
The low came right when things were at their worst… at the start of the lockdowns when unemployment numbers were the highest on record.
And the current rally began in October of last year – on the very day we saw the highest inflation report in modern history.
If you want to make money in stocks, turn off the TV, put down the newspaper, and focus on how stocks are moving.
The price action is clear… This is a power trend.
Bull markets make it much easier to make money in stocks.
And if you want to make BIG money, the trick is to focus on leading groups and tap into the “theme” of the market.
Right now, the theme is AI. Focusing on stocks with exposure to artificial intelligence will vastly improve your odds of success in this market.
In a Saturday webinar two weeks ago, I shared my favorite stock to buy on Monday – SoundHound (SOUN), a small-cap AI stock in a perfect breakout setup.
Many of you bought that stock with me, right before it shot up 50% in 9 days. If you are one of those people… well done.
After being up just over $9k, I sold half of my position on Wednesday and plan to add back in on a retracement.
If you missed the trade, don’t chase it. There will be more opportunities.
Here are a few other trade ideas that caught my eye:
JFrog (FROG)
JFrog is a supply chain software company out of California.
This mid-cap stock formed a base over the last twelve months and is now breaking out on above average volume.
This looks good for a buy with a stop loss at $26.00.
Unity Software (U)
Unity is a big player in the metaverse space since the company specializes in real-time 3D content.
The company is also deep in AI development which is a space I want as much exposure to as possible.
The stock has had a hard time getting above the $43 level, but the recent surge in volume looks like the fuel it needed to power to new highs.
You can also see the cup and handle pattern I have drawn on the chart.
U looks buyable to me here or on any pullback to its 21-day moving average.
Shopify (SHOP)
Shopify needs no introduction.
If you bought anything online from anywhere other than Amazon, the sale probably ran through Shopify.
The stock is up 175% since October and proving to be a market leader.
The recent action shows shallowing retracements on declining volume – a textbook breakout pattern.
I would consider buying on a move above $66.35 with a stop loss at $61.45 to risk 7% on the trade.
Best wishes for your trading,
