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There’s always a bull market somewhere.
Whether the market is down 20%, up 10%, or moving sideways, there’s a bull market to be found.
Indeed, I can assure you there’s one happening right now.
No matter the macroeconomic conditions – boom or bust, expansion or recession, bull market or bear market, rally or crash – we just have to find the bull market.
If you know me, you know me as a high-growth technology stock investor. I’m not the type to recommend slow-moving, low-paying dividend stocks. However, while I’m still a long-term growth investor, context matters. And right now, the markets are so volatile that some investors just can’t wait two, five, or 10 years for their growth stocks to turn into the next Amazon.
No, you need a way to boost your income now and as fast as you can.
And this is where my Caltech background and love for technology comes into play… I’m constantly watching the markets, identifying trends, and looking for undeniably strong fundamentals in the companies I invest in. But a key cornerstone of this strategy relies on putting my nose to the grindstone and keeping my ear on the micro happenings all around us.
What did I find out?
Well, for starters, my team and I recently began using an artificial intelligence predictive generator for art called DALL-E. Not to be confused with WALL-E, the popular children’s movie, DALL-E can generate human-like artwork in a matter of seconds. It’s so good, and so representative of the fast-pace of innovation, that I even began including its productions in one of my investing newsletters.
And it’s not just me that’s fascinated by predictive AI.
As long as I can remember, pop culture has been obsessed with artificial intelligence. Hollywood directors have given us movies like Ex Machina and The Terminator, writers and showrunners have produced TV shows like Westworld and Black Mirror, and authors have published books like The Hitchhiker’s Guide to the Galaxy and Ready Player One, which all feature AI as a prominent theme. These works of pop culture often reflect society’s fears and aspirations about the technology.
Many depict AI as powerful and autonomous entities that may threaten humanity’s survival. This portrayal of AI as a potential threat is often used as a commentary on the ethical and societal implications of the technology. For example, in The Terminator, the AI Skynet becomes self-aware and decides to eliminate humanity as a threat to its own existence. This film serves as a warning about the potential dangers of creating advanced AI that is not properly controlled or regulated.
On the other hand, other works of pop culture portray AI in a more positive light, as helpful and benevolent beings that work alongside humans. For example, in the movie Her, the AI Samantha becomes the protagonist’s companion and helps him navigate his personal and professional life. This portrayal of AI as a helpful and supportive entity serves as a commentary on the potential benefits of advanced AI and the positive impact it could have on society.
Pop culture can shape public perception of AI and influence how people think about the technology in real life. It can also serve as a catalyst for discussions and debates about its ethical and societal implications. As AI continues to advance, it is likely that we will see more representation of it in pop culture, and it will continue to serve as a commentary on the technology and its impact on society.
The rise of predictive analysis, Big Data, and artificial intelligence in popular culture and media has also helped to expand interest in this approach to investing.
People are increasingly comfortable with using data analytics in other areas of their lives, such as rating hotels and restaurants, and it makes sense to apply this same principle to the stock market. With the growing availability and accessibility of data, the likelihood of quantitative strategies applied to investing is likely to surge in popularity.
I don’t know about you but investing in stocks that earn you less than the current inflation rate is the riskiest thing you can do with your money. The traditional way of viewing the markets – and the problem with traditional income investments – is due to the uncertainty in the world.
It is difficult to predict what the world will look like in the future, but it is important to think about your money in the present. Nothing is guaranteed, and it is important to find ways to increase your income and wealth as quickly as possible. If you want safety without growth, a savings account at a local bank may be the best option. However, if you want the chance to earn consistent returns, you should focus on a strategy that uses data and quantitative analysis to uncover fast-moving stocks before they take off.
As an investor, I like to stay ahead of the curve. As an innovator, I tend to do the same.
That’s why my team and I have created an easy-to-use, low-risk way to give you more control over your investments. This strategy is the best way to quickly grow your income and wealth.
If you want consistent, low-paying income, then, by all means, stick with a stable, small-paying savings account. But if you want the chance to rack up winner after winner, month after month, then put the power back in your hands.
This is why we’ve developed our proprietary, and exceptionally complex, quantitative system… to find those bull markets wherever they are.
But like I said, the likelihood of such strategies surging in popularity is extremely high. However, it’s the so-called “smart money” that will use quantitative analysis to find and buy stocks before the little guy even realizes what’s going on. In a fair and equitable world, that shouldn’t be our reality.
So here’s what I’m going to do… on Thursday, Jan. 19, I won’t just show you how our Fast Money Line system can generate thousands or tens of thousands of dollars (no matter what the market is doing); I’ll also give you a free Stage-2 breakout stock recommendation!
It’s time to level the playing field.
What Is Stage Analysis?
This fast-money line strategy is based on a method from Stan Weinstein known as “stage analysis.”
In his book Secrets for Profiting in Bull and Bear Markets, Stan Weinstein presents a method of analyzing market trends through the use of stages. According to Weinstein, there are four stages that a stock can go through: Stage 1 (Accumulation), Stage 2 (Markup), Stage 3 (Distribution), and Stage 4 (Decline).
Stage 1 (Accumulation): Weinstein argues that the market is in a bearish phase and that smart investors should be buying stocks at discounted prices. This is the stage where the smart money is entering the market and buying undervalued stocks.
Stage 2 (Markup): Weinstein argues that the market is in a bullish phase and that investors should be selling stocks at a profit. This is the stage where the public starts to enter the market and pushes prices higher.
Stage 3 (Distribution): Weinstein argues that the market is in a bearish phase and that investors should be selling stocks at a profit. This is the stage where the smart money starts to exit the market, and prices begin to decline.
Stage 4 (Decline): Weinstein argues that the market is in a bearish phase and that investors should be selling stocks at a loss. This is the stage where the general public starts to exit the market, and prices continue to decline.
This stage analysis method is based on the idea that markets go through predictable cycles and that by understanding these cycles, investors can make better decisions about when to buy and sell stocks. According to Weinstein, by identifying which stage the market is in, investors can make more informed decisions about when to enter and exit the market.
Overall, Weinstein’s stage analysis method is a useful tool for investors looking to navigate the ups and downs of the stock market. By understanding the different stages that markets can go through, investors can make more informed decisions about when to buy and sell and how to potentially profit from market trends.
Now that you’re familiar with stage analysis, I want to give you a few trading tips before presenting the stock ideas our quantitative system has flagged as potential buys. Simply by knowing and understanding the following tips, you will be in a better position than the majority of retail investors buying stocks today.
Trading Tip #1: A New Meaning to Putting a “Hitch” in Your Giddy-Up
Whether you’re new to trading stocks or have been doing it for a while, you’ve likely come across this common chart dynamic – a “hitch.”
The term “hitch” refers to a stock that breaks through resistance, appears to be gathering bullish momentum, but then suddenly reverses course and falls back to its previous resistance point.
Here’s an example with one of our holdings from earlier this year.
You can see it breaking its prior resistance level, only to “hitch” and immediately re-test it.
When a stock breaks through its resistance level, there are three potential outcomes that traders should be aware of.
The first outcome is that the stock may continue to rise significantly without a meaningful pullback, as seen in one of our breakout trades, which rose by 25% in its first week.
The second outcome is that the stock may experience a hitch or re-test of support before showing renewed bullishness, providing an opportunity for traders to buy in at or near the resistance level with more confidence in the trade.
The third outcome is that the stock may experience a hitch and not hold support, resulting in a decrease in value and revealing the breakout to be false.
As a trader, you must consider your own investment temperament when determining a strategy for handling these outcomes. Some traders may choose to wait for a hitch and test of support before buying into the stock, while others may choose to buy on the breakout to capture potential gains. A word of advice: Be consistent. Do not make decisions arbitrarily.
A strategy that many professional traders follow is the half-and-half approach, where they buy a half-position on the breakout and wait until the hitch successfully tests support before buying the second half. This allows for the potential to capture gains while also minimizing potential losses.
Ultimately, the right choice will depend on you and your investment style.
Trading Tip #2: Put the Trading Odds in Your Favor
When analyzing potential trades, it is important to understand the power of moving averages. A moving average is simply a mathematical calculation that takes the average of a certain number of days’ worth of market prices and charts that line. Commonly used moving averages include the 50-, 100-, and 200-day.
While moving averages may seem like simple mathematical calculations, they often carry significant psychological weight for traders on Wall Street. By understanding the role that moving averages play in price action, you can use this information to your advantage.
For example, when evaluating a potential trade, look at a chart of the stock you are considering along with its various moving averages. By looking at several years’ worth of price action, you may notice that one of these moving averages tends to act as a “spine” of sorts, providing support or resistance at different times.
To illustrate this concept, take a look at blue-chip utility company Duke Power (DUK) over the past three years, along with its 200-day moving average.
Notice that in 2019, DUK used the 200-day moving average as a springboard for support. However, in 2020, the 200-day moving average turned into resistance for much of the year. But in 2021, it turned back into support.
By understanding the role that moving averages play in price action, you can make more informed decisions when evaluating potential trades.
Now, let’s return to the idea of a “correct” moving average.
Below, we swap out the 200-day MA for DUK’s 100-day.
What would have happened if you’d tried to use this 100-day MA as a trade guideline?
When analyzing a stock’s performance, always consider the use of moving averages (MAs) as a tool to identify potential support and resistance levels.
One commonly used MA is the 100-day, which can serve as a broad trendline. Note that not all stocks will find support and resistance at the same MAs. In the case of DUK, the 100-day moving average may not be as effective as the 200-day MA in identifying specific support and resistance areas.
To effectively use MAs in your stock analysis, follow these steps:
By utilizing MAs in your analysis and understanding their potential impact on your trade, you can increase your chances of success in the stock market.
Trading Tip #3: Don’t Let Prior Losses Cloud Your Judgment
When considering reentering a trade that you previously got stopped out of, remember that a losing trade is a natural part of the market. However, the question of whether to reenter a trade that you lost money on can be complicated by emotions.
To determine if reentering is a good idea, take a look at the chart and corresponding data. How strong is the Stage-2 breakout pattern? What is the position of the price relative to key moving averages? Finally, consider the volume of the trade and the RSI.
If the trade meets all the necessary criteria, then it may be a good time to reenter, regardless of your previous loss. No two situations are alike, and context matters. Ask yourself if the current situation is different from when you first entered the trade.
As traders, our decisions should be based on numbers and patterns, not emotions or losses. Our breakout system guides us in making informed decisions that are not clouded by emotions.
These numbers and patterns have led our quant-based system to identify three potential Stage-2 breakout stocks.
But here’s the thing: The volatile markets change fast, without a moment’s notice. So, armed with our breakout system, we will monitor each of the following three stocks right up until my Fast Money Line event, Thursday, Jan. 19, at 4 p.m.
But only one of these stocks can pass muster to become the first Stage-2 stock to buy immediately.
3 Breakout Stocks on Our Radar
#1 Nine Energy Services Inc (NINE)
Nine Energy Service (NINE) is an oilfield services company that helps unconventional oil and gas resource development across all North American basins and abroad.
What We’re Seeing:
Below, we look at the same chart but remove the stage trend lines, while adding in NINE’s 50-day, 100-day, and 200-day moving averages (MAs).
#2 Cabaletta Bio (CABA)
Cabaletta Bio (CABA) discovers and develops targeted cell therapy product candidates to potentially cure patients with autoimmune diseases.
What We’re Seeing:
As we did with NINE, below, we look at CABA’s same chart but remove the stage trend lines, while adding in CABA’s moving averages.
#3 ProQR Therapeutics NV (PRQR)
ProQR Therapeutics (PRQR) is a Dutch biotech company that specializes in the development of RNA therapeutics for rare genetic diseases with an ophthalmologic application.
What We’re Seeing:
Once more, let’s look at PRQR’s chart, focusing on the moving averages.
The Final Word
The factors that determine which stocks perform well on Wall Street can change over time. In the past decade, stocks with high potential for growth were among the most successful in the market. However, in recent years, inflation and interest rates have risen, causing a shift toward value stocks.
It is uncertain whether this trend will continue, and some analysts predict that growth stocks may become more successful again.
One possible indicator of this trend is the performance of technology stocks in the stock market. In the beginning of 2023, the Nasdaq, a stock index heavily composed of technology companies, has seen positive growth.
This may indicate a larger trend of success for tech stocks to continue throughout the year, potentially due to factors such as a stable economy and a pause in interest rate hikes by the Fed.
The data we’re seeing this year shows that things will, indeed, play out this way over the next few months. And, using our Fast Money Line quantitative system, we couldn’t be better positioned to take advantage.
Looking at the data, the NFIB’s Small Business Optimism Index pushed lower in December, but it remains well-above where it would be if the economy were falling into a deep recession. Meanwhile, the percentage of small businesses that plan to raise prices over the next three months fell to a two-year low and is now at levels consistent with sub-3% inflation.
Yet again, we see that inflation is crashing toward 3% without the help of a deep recession.
So long as the data continues to support this outlook, then stocks will continue to grind higher, and our breakout stocks will lead the rally.
The price action so far this year is strongly consistent with a stock market that wants to rebound big. We believe it will do just that, and that’s where our unique “Fast Money Line” quantitative system comes in.
We’re ready to invest for piles of recession-proof cash by going on a massive Stage-2 buying spree in the beginning of 2023 – we’re just waiting for the market to present these opportunities, as with the three stocks highlighted above. Using our quantitative system, we believe we can construct a 2023 portfolio that can (and will) rally beyond our wildest expectations.
Over the next few days, I will be sending you more analysis on each of the aforementioned stocks in this report. As I said earlier, I’m going to analyze, analyze, and analyze! One of these stocks could be your first Stage-2 breakout stock, so be sure to tune in Thursday, Jan. 19, at 4 p.m. Eastern.
Patience is finally turning into profit. We couldn’t be more excited about the next 12 months!