Sometimes, when I prepare for my videos, I feel like I have 100 thoughts going through my head. I do my best to organize all these thoughts as concisely and as clearly as possible in the videos. Hopefully, this Market Note clarifies some of my current analysis:
1) Longer term, I love many secular growth themes. These include Aerospace and Defense, Semiconductors, Biotech, and Data Center related. Here’s the challenge: They’re not going to go up every day. There will be periods when they correct, build bases, and have normal pullbacks to key moving averages. In other words, there will be periods when they are more volatile than normal. Three ways to deal with this volatility include: Don’t trade them if they are too volatile for you, use smaller positions and expand your timeframe, or get strong entry points and just deal with the volatility if you are playing them for bigger moves.
2) Personally, I like to size up and aggressively trade stocks when the Nasdaq Composite is in a power trend. As I’ve discussed in many recent videos, we are not in a power trend right now, but signs are slowly improving in the growth world and I’m always keeping an eye out for any positive developments in price action. The reason I prefer power trends is that it’s an environment that’s more favorable for stocks. There’s less volatility, breakouts work more consistently, and the 21-day EMA serves as a great area of support.
3) The main reason I’ve discussed defense over the past few weeks is that I like to combine trading these strong growth stocks when we are in a power trend. As I mention in the Weekend Video, these stocks don’t always correlate with each other. Thus, making things more difficult. I also consider sentiment and seasonality in my equation. Again, making things more difficult. The main theme I’ve discussed over and over is that managing a portfolio of growth stocks IS NOT EASY. You have to know your timeframe and be able to make decisions. If all of this is too challenging for you, one option is to use ETFs (index and/or sector) as part of your portfolio.
If you have any questions, please ask them during the next LIVE webinar which will be this Monday, February 23rd at 7PM EST. I will send out the Zoom link on Monday.