The Bottom Line:
- SPY is showing strength and could push higher, but a rejection may occur near key resistance levels around 549-550.
- Tesla is trading within a range, with resistance at 185 and support at 183. A rebound towards the higher 180s is possible.
- Nvidia remains bullish but may show signs of exhaustion soon, potentially leading to a pullback.
- Economic data releases and the VIX index are crucial factors to watch for potential market volatility.
- While the market momentum suggests greed, sentiment is more fearful, and a rug pull may occur in the next 2-3 weeks.
VectorVest’s Money Machine Search: Uncovering Strong Fundamentals
Uncovering Stocks with Strong Fundamentals
The VectorVest Money Machine search is designed to uncover stocks with strong fundamentals that have the potential to generate significant returns. This search looks for stocks with a 5-day moving average of RTE above 40, indicating a positive trigger in the timing of the move. Additionally, the search requires a Comfort Index greater than 1.25, which means the stocks have a higher ability to withstand lengthy price declines and are less volatile compared to other stocks.
Key Criteria for the Money Machine Search
The Money Machine search also focuses on stocks with a price greater than $1, an average volume greater than 100,000 shares, and double-digit earnings growth. The search requires the earnings per share to be greater than zero, ensuring positive earnings, and the sales growth to be greater than 10%. By targeting mid-cap stocks with a market cap less than $10 billion and sorting by RV (Relative Value) and RT (Relative Timing), the search identifies stocks with good upside potential that tend to go up more than they go down.
Managing Trades and Setting Stops
Once the stocks are identified using the Money Machine search, it’s crucial to manage the trades effectively. VectorVest’s Star Search tool helps in this regard. When a stock is in the fast lane, it indicates a strong upward trend. However, if the stock moves into the middle lane, it may be a signal to either take half of the position off the table or exit the trade entirely, especially if the stock is considered overpriced. Setting trailing stops, such as a 15% trailing stop, can help protect profits and limit potential losses. By monitoring these stocks daily and using the Star Search tool, traders can make informed decisions on when to enter and exit positions.
Money Makers Search: Pre-Built for High Potential Stocks
Focusing on Robust Sales and Earnings Growth
The Money Makers search places a strong emphasis on companies with robust sales and earnings growth. By requiring sales growth to outpace earnings growth, the search ensures that the companies have a solid foundation to support their earnings. For example, one of the stocks identified by the search has a sales growth of 38% and an earnings growth of 30%. This indicates that the company is generating sufficient sales to maintain and potentially expand its earnings in the future.
Analyzing the Stock Charts
Analyzing the stock charts of the companies identified by the Money Makers search provides valuable insights into their performance and potential entry points. The video highlights several stocks, such as TLS, CAMT, ADMA, and BMA, and examines their charts in relation to the NPI (New Price Index). By looking for breakouts above resistance levels and considering the overall trend, traders can make informed decisions about when to enter a position. For instance, with BMA, the video suggests waiting for the stock to break above the resistance level of $68.15 before considering an entry, as this would indicate a stronger bullish momentum.
Adapting to Market Conditions
While the Money Makers search identifies stocks with strong fundamentals and upside potential, it’s crucial to adapt to market conditions and manage risk accordingly. The video emphasizes the importance of setting stops to protect against potential losses, even if a stock appears to be a strong candidate. By using trailing stops or monitoring the stock’s position in relation to the Star Search lanes, traders can make informed decisions about when to take profits or exit a position. This adaptability allows traders to capitalize on opportunities while mitigating risk in various market conditions.
Combining Searches for Maximum Upside and Minimal Risk
Combining the Power of Money Machine and Money Makers Searches
By utilizing both the Money Machine and Money Makers searches in VectorVest, traders can identify stocks with strong fundamentals and high potential for generating significant returns. The Money Machine search focuses on stocks with a combination of positive timing triggers, low volatility, and double-digit earnings and sales growth. On the other hand, the Money Makers search is a pre-built search within VectorVest that targets stocks with a relative safety greater than one, sufficient trading volume, and a buy recommendation.
Monitoring and Managing Positions
Once the stocks are identified using these searches, it’s essential to monitor and manage the positions effectively. VectorVest provides tools like the Star Search, which helps traders determine when a stock is in the fast lane (indicating a strong upward trend) or in the middle lane (suggesting a potential exit point). By setting trailing stops, such as a 15% trailing stop, traders can protect their profits and limit potential losses. Additionally, regularly reviewing the stock charts and considering factors like resistance levels and overall trend can help make informed decisions about entry and exit points.
Adapting to Market Conditions and Risk Management
While the Money Machine and Money Makers searches provide a solid foundation for identifying promising stocks, it’s crucial to adapt to market conditions and manage risk accordingly. The video emphasizes the importance of setting stops and being prepared to take profits or exit positions when necessary, even if a stock appears to be a strong candidate. By monitoring the stocks’ positions in relation to the Star Search lanes and considering other market factors, traders can make informed decisions that align with their risk tolerance and investment goals. Ultimately, combining the power of these searches with effective risk management and adaptability can help traders navigate various market conditions and potentially generate significant returns.
Tracking Performance with VV Money Machine and Money Makers Portfolios
Tracking Performance with the VV Money Machine Portfolio
To demonstrate the effectiveness of the Money Machine search, a portfolio called the “VV Money Machine” was created on the day the video was recorded. The portfolio consists of the eight stocks identified by the search, and a trailing 15% stop was set for each position. On the first day, the portfolio was already up 2.10%, showcasing the potential of these carefully selected stocks. Traders can choose to set the trailing stop and let it manage the positions automatically or monitor the stocks daily using the Star Search tool and manually adjust their positions based on the stock’s movement between the fast and middle lanes.
Tracking Performance with the Money Makers Portfolio
Similar to the VV Money Machine portfolio, a “Money Makers” portfolio was created to track the performance of the stocks identified by the pre-built Money Makers search in VectorVest. The video creator cherry-picked the top five stocks from the search results, which included well-known names like Nvidia, Arista Networks, Applied Materials, Synopsis, and Cadence. These stocks were chosen based on their strong fundamentals, such as impressive sales growth compared to earnings growth. By monitoring the performance of this portfolio, traders can gauge the effectiveness of the Money Makers search in identifying stocks with high potential returns.
Adapting Stop Criteria for the Money Makers Portfolio
Since the Money Makers search specifically targets stocks with a buy recommendation, the video creator suggests adjusting the stop criteria for the Money Makers portfolio. Instead of using a trailing stop, the creator recommends setting the stop criteria to “recommendation not equal to buy.” This means that if a stock’s recommendation changes from a buy to a hold, it would trigger an exit from the position, allowing traders to lock in profits. By adapting the stop criteria to align with the search’s focus on buy recommendations, traders can effectively manage their positions and minimize potential losses.
Protecting Profits and Managing Risk with Proper Trade Strategies
Implementing Trailing Stops and Monitoring Positions
To protect profits and manage risk, it’s crucial to implement trailing stops when trading the stocks identified by the Money Machine and Money Makers searches. The video creator suggests using a 15% trailing stop for the VV Money Machine portfolio, which can be set and left to manage the positions automatically. Alternatively, traders can monitor the stocks daily using the Star Search tool and manually adjust their positions based on the stock’s movement between the fast and middle lanes. By actively managing positions and adhering to a strict stop-loss strategy, traders can minimize potential losses and lock in profits when necessary.
Adapting to Changing Market Conditions
While the Money Machine and Money Makers searches provide a solid foundation for identifying promising stocks, it’s essential to remain adaptable to changing market conditions. The video creator emphasizes the importance of regularly reviewing the stock charts and considering factors such as resistance levels, overall trend, and potential overbought conditions. By staying vigilant and adjusting trading strategies accordingly, traders can navigate various market scenarios and make informed decisions about entry and exit points. This adaptability allows traders to capitalize on opportunities while mitigating risk in different market environments.
Leveraging VectorVest’s Tools for Effective Trade Management
VectorVest offers a range of powerful tools that can aid traders in effectively managing their positions and protecting profits. The Star Search tool, for example, provides valuable insights into a stock’s momentum and helps traders determine when to enter or exit a position based on its location in the fast or middle lanes. Additionally, the ability to set custom stop criteria, such as the “recommendation not equal to buy” for the Money Makers portfolio, allows traders to align their risk management strategy with the specific criteria used in the stock selection process. By leveraging these tools and features, traders can make data-driven decisions and implement robust risk management techniques to optimize their trading performance.
SPY Faces Resistance at 549-550, Potential for Higher Push or Rejection
SPY Approaching Key Resistance Levels
The S&P 500 (SPY) is currently attempting to break the high around the 548.5 area. The market closed above or very close to that level and pushed above it during the after-hours trading, showing strength in the charts. There are still a lot of buyers present, and the market is continuing to break all-time highs, suggesting more upside potential. However, it’s important to note that the market is heavily weighted by a few tech stocks, such as Nvidia and Apple, which are pushing things up while other stocks are not performing as well.
Potential for Higher Push or Rejection
Despite the market’s bullish outlook, there is a risk of rejection once it approaches key resistance levels. Tomorrow, on Thursday, June 20th, 2024, one hour before the market opens, initial jobless claims, housing data, and other economic indicators will be released. These factors could introduce volatility into the market. Additionally, the fear and greed index suggests that people are somewhat fearful due to the market’s recent pumping, but the market’s position relative to its moving averages still indicates a greedy place.
Levels to Watch and Possible Scenarios
For SPY, the key levels to watch are 549 as resistance, and if broken, 550 will be the next target. If SPY loses support at 548.5, it could dip back down towards the 20 EMA on the hourly timeframe around 547.5. Further loss of support could lead to a bigger dip down to 545 or 544. While the odds favor a trend to go a little higher, it’s crucial to be cautious as SPY approaches key resistance levels and runs on a triple bearish divergence. A little correction or rejection might occur as SPY gets close to 550.
Tesla Range-Bound: Support at 183, Resistance at 185, Possible Rebound
Tesla Stuck in a Narrow Range
Tesla is currently trading within a narrow range, with resistance at 185 and support at 183. The stock was completely range-bound on Tuesday, and whichever way it breaks will determine the direction of a bigger move. If Tesla loses support at 183, it could dip down to fill the gap at the 180 area. On the other hand, if it breaks past the resistance at 185, the stock could push up to 188 and fill the imbalance in that region.
Potential Rebound Scenario
Based on the current market sentiment, there is a possibility that Tesla might experience a slight dip to retest the 50 EMA for another liquidity grab, only to rebound and attempt to get back to the imbalance in the higher 180s. In this scenario, traders should look for a small dip to the 50 EMA, followed by a bounce and a push back up towards the high 180s. However, it’s essential to keep the key levels in mind and be prepared for any unexpected news or events that could impact the stock’s price action.
Preparing for Different Outcomes
While the most likely possibility is a rebound in Tesla’s stock price, it’s crucial to have a plan in place for different scenarios. Traders should always be aware of the key support and resistance levels and be ready to adapt their strategies accordingly. By monitoring the stock’s behavior around these levels and keeping an eye on any relevant news or market developments, traders can make informed decisions and manage their risk effectively.
Nvidia Bullish Trend Continues, Exhaustion and Pullback on the Horizon
Nvidia’s Impressive Rally Continues
Nvidia’s stock has been on a bullish trend, consistently pushing higher and breaking resistance levels. The company’s strong performance and positive news have been driving the stock’s impressive rally. As of now, the stock is still showing signs of strength, with the potential to continue its upward movement in the short term.
Key Levels to Watch
Traders should keep a close eye on the key levels for Nvidia’s stock. If the price loses support at 136, it could dip down to 135. On the other hand, if it breaks past the resistance at 136.6, the next target would be 137. These levels will play a crucial role in determining the stock’s short-term direction and potential for further gains.
Anticipating a Pullback
Despite the current bullish sentiment surrounding Nvidia, it’s important to consider the possibility of a pullback in the near future. The stock has been pumping aggressively for an extended period, and it may need to consolidate or retrace to maintain a healthy trend. While the exact timing of this potential pullback is uncertain, traders should be prepared for a possible correction in the coming weeks as the stock approaches tighter resistance levels.
Economic Data and VIX: Key Indicators for Market Volatility
Economic Indicators and Market Volatility
Economic data plays a crucial role in determining market volatility and the direction of stock prices. Key indicators such as initial jobless claims, housing data, and reports from the Philadelphia Federal Reserve on new orders, prices paid, and employment can significantly impact market sentiment. These data points are set to be released an hour before the market opens on Thursday, June 20th, 2024, and traders should be prepared for potential volatility during this time.
Fear and Greed Index and Market Momentum
The fear and greed index is another important factor to consider when assessing market sentiment. Currently, the overall emotion in the market is somewhat fearful due to the recent aggressive pumping of stock prices. However, the market’s position relative to its 120-day moving average suggests that there is still greed driving prices higher. The puts and call option positioning also indicates extreme greed, with the ratio of puts to calls at a very low level.
VIX and Potential Market Correction
The VIX, or the volatility index, is a key indicator of market volatility. While the VIX is currently below its 50-day moving average, suggesting a relatively calm market, there are signs that a potential correction may be on the horizon. The VIX has gaps to fill at lower levels, around 12, which could lead to a temporary dip in the index. However, an inverse head and shoulders pattern is developing on the VIX chart, which could signal a significant bounce once the index reaches critical support levels in the 11.5 to low 12 range. This potential bounce in the VIX could coincide with a market correction in the coming weeks.
Greed vs. Fear: Rug Pull Potential in the Next 2-3 Weeks
Market Sentiment: Fear vs. Greed
The current market sentiment is a mix of fear and greed, with the fear and greed index suggesting that people are somewhat fearful due to the market’s recent aggressive pumping. However, when looking at the market’s position relative to its moving averages, there are still signs of greed pushing prices higher. The puts and call option positioning also indicates extreme greed, with puts at a very low level compared to calls.
VIX: Potential Dip and Bounce
The VIX, or volatility index, is currently below its key 50-day moving average, indicating a relatively calm market. However, there are some interesting patterns emerging on the VIX chart. The index has gaps to fill at lower levels, particularly around the 12 mark, which could lead to a temporary dip in volatility. On the other hand, an inverse head and shoulders pattern is developing, suggesting that once the VIX reaches critical support levels between 11.5 and the low 12s, a significant bounce could occur.
Rug Pull Scenario: 2-3 Week Outlook
Taking into account the current market conditions and the patterns observed on the VIX chart, there is a possibility of a rug pull scenario unfolding over the next two to three weeks. The potential sequence of events could be as follows: the VIX dips further to fill the gaps and reach key support levels, while the market continues to push higher temporarily. However, once the VIX bounces back strongly from these support levels, it could coincide with a significant market correction. This scenario highlights the importance of monitoring the VIX and being prepared for potential volatility in the coming weeks.
