My Stock Watch List Outperformed the $SPY

Yes ... U Can Time the Market

I believe in simplicity in the market.  Too often we as traders and investors get too involved in analyzing all the politics and the news in the media.  It's good to remind ourselves that the market is a collective result of all the buyers and sellers in the market.  It's mostly institutions like hedge funds, mutual funds and pension funds that account for over 75% of the trading that occurs daily in the US stock markets.  Their market sentiments is what drives the markets.  When their sentiment changes from being a net seller (bearish) to a net buyer(bullish), it shows up in prices moving higher in higher volume of trading. 

"Follow Thru"  day was identified by IBD (Investors Business Daily) on Friday January 4th.  December 24th the market sentiments of the institutions was bearish and we reached an all time low that day.  Suddenly soon after the Christmas holidays, institutions suddenly became the buyers and their sentiments changed overnight to be bullish.  Trading volume increased to twice the daily average volume of trading on  $SPY (general market performance) as well as  $QQQ (Leading Growth Stock Index).  Market made a bullish turn and we had several days of bullish sentiments.  January 7th was the day to start dipping your toes back in the market just when an average retail trader had given up on the market.  Ideal time to enter the market was on January 7th.  We are currently  +13.71%  with  $QQQ  in the last 10 weeks.  That's  +71% annualized.  That's how you profit in the market by  "Timing" it right.

How Good is Your Stock Watchlist

As a Growth Stock investor, one must constantly build a stock watch list every week.  You are constantly harvesting profits when your stock makes profits based on your trade plan. You are also closing down positions on laggards and stocks that are meeting your loss targets.  As a trader and an investor, you are constantly deploying your profits back into the market with newly found growth stocks.  One of the methods I utilize to identify true leading growth stocks is to compare the performance of the stocks on my watch list against the 3 major indexes - $SPY, $QQQ  and $DJI  every week.  This way I can isolate stocks that are the real leaders in the market. 

Last week, the performance of the 3 indexes I follow were:

• $DJI   ... +1.57% (proxy for the 30 big blue chip companies)
• $SPY  ... +2.50% (proxy for general market performance)
• $QQQ ... +4.19% (proxy for growth stock performance)

In my blog post last week, I had identified 30 stocks that I was monitoring.  28 of those stocks are hovering around or above the 20 day sma(simple moving average).  That is a sign of institutional support.  14 of those stocks did   +5.91%  and solidly beat the performance of the general market as reflected with the +2.50% performance of the  $SPY.   Average performance of all the 30 stocks for the week was  +3.08%.    This out performance of stocks on my watch list convinces me that I have a list of stocks that are the true leaders in the current market.  Most of these stocks are extended now.  What we need to be looking for now is for the market to consolidate its gains and have these stocks build a new base before they propel higher.   

There will always be people who see what's new as a threat to the status quo

By ... Jordan Shapiro, writer

Happy Trading!

Amin