Before we start tonight’s briefing we want to go over several important basic trading points to increase our members' success.
1. Do not short - Only a few times a year we will place shorts when we are entering the final phase of a significant correction (intermediate cycle decline or ICL). It takes experience and many tools to differentiate a minor decline (daily cycle decline or DCL) from a more significant ICL that can be safely shorted. The stock market is constantly propped up with liquidity from the Federal Reserve. Bet with the manipulation, not against it. Buy stocks at correction bottoms as they tend to fire out of a correction low. Bottoms are much easier to pick than tops as there is no telling when the Fed will stop supporting the market. In the future we will go over a few techniques for our members on what to look for in a cycle bottom for stocks. Our system won’t get you in at the exact day of the bottom, unless we are lucky like in March, but will get you in extremely close to it.
2. Don’t trade during tough periods - Recognize periods of chop and consolidation in markets, like what we are experiencing now. These are difficult to trade, make money in, and do not produce any trending moves. They make many traders burn a lot of mental capital which leads to a series of bad trade decisions and revenge trading. Humans are emotionally wired beings. Saying one needs to be more disciplined in their trading approach and doing it are two different things. We are selective in what we buy and hold through periods like this.
3. Have a contrarian approach - We buy when sentiment is poor and our cycles align with our artificial intelligence algorithm. If one is going to buy stocks based on fundamentals and current market conditions you are going to be hard pressed to make money consistently. The markets are looking 6 months ahead. If we had waited to buy the Nasdaq back in March or BLMN in April due to poor fundamentals and bad headlines we would have missed out on a very profitable burst.
During an Intermediate advancing cycle in stocks you will have anywhere from 2-4 daily cycles embedded in it. We have had two already and a third is getting ready to start as soon as next week.
We are long restaurant stocks during this sideways chop because they are capable of an explosion upward at any point in time. One single sector upgrade from a large bank or merger activity would create a spark. Trading 60% off of their February highs while the Nasdaq is at all time new highs can’t and won’t last for long. We certainly expect an advance during the next cycle and it should begin any day now.
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