Look at this article and you’ll know what is outperforming the market right now!
The stock market is currently in a phase of correction. Traditionally, the CAN SLIM strategy is optimized for an uptrending market, suggesting that now might not be the ideal time to open new positions. However, I’ve learned from experience that even during these periods, certain opportunities persist. While it’s a time of caution, it’s also a period that could precede a strong rally—timing, as always, is uncertain.
Market Overview: The Calm Before the Storm?
The current market climate is tricky—volatile enough to make you think twice. And what’s our best move in such a market?
- Tighten stop-losses to about 3% to 5% of the purchase price.
- Set profit targets at 10% to 15% above the buying price.
Why such precision? Because minimizing losses while optimizing potential gains is key when the market is this unpredictable. But who’s making waves even now? Let’s dive into some specific stocks.
IBKR – An Understated Powerhouse
Interactive Brokers (IBKR) is not just sitting back during these turbulent times. What’s their story?
- Currently ranked 46th in industry strength out of 197.
- Shows a promising uptrend in earnings and institutional accumulation.
And the kicker? It has an RS rating of 92, showing significant outperformance in the market. How do you capitalize on this? I’ll share some buying and selling strategies further down.
FTAI – Stability in Uncertainty
FTAI Aviation (FTAI) presents a unique blend of stability and potential. What sets it apart?
- Holding a steady rank of 38 out of 197 in its sector.
- Exhibits a strong, consistent uptrend with an RS rating of 98.
And why should you care? Because in times of market instability, betting on stocks with steady growth and strong fundamentals can be less risky. Wondering when to make your move? Details are up next.
Navigating Your Investments: When to Buy and When to Sell
Investing wisely means knowing not just what to buy, but when. Here’s how you can approach it:
- IBKR:
- Buy: Look for stability or an uptick in market trends around its current levels.
- Sell: Consider taking profits at a 10-15% increase or setting a stop-loss just below 3% of your entry point.
- FTAI:
- Buy: Ideal during a strong market day that aligns with its upward trend.
- Sell: Set a stop-loss close to 3% below your buying price and a profit target around 15%.
details at a glance
IBKR
- Next EPS Date: NA
- Industry Rank (X/197): 46
- Stage (1-4): 1
- Base Type: Cup with handle
- Base Depth, %: 24
- Up/Down Ratio: 1.7
- EPS Trend: Up
- RS Rating: 92
- RS Trend: Up
- Institutional Ownership Trend: Up
- Pros:
- The stock is accumulated by the overall market and institutions.
- Earnings are in an uptrend and the company’s profits are increasing.
- RS trend is also up, indicating that the stock is outperforming the overall stock market.
- The latest base depth was 24%, which is low for a cup with handle pattern, indicating low volatility and added safety.
- Cons:
- Industry rank should be higher; 46th place adds some risk.
- Sales growth is slightly low and does not fully meet the CAN SLIM criteria.
- Comments: At the time of this writing, the price of the stock is at the EMA-21 line. This suggests that we could open the position fairly safely and place a stop-loss slightly below the EMA-21 line.
- Comments (CAN SLIM, SEPA, etc): The stock almost fits the CAN SLIM criteria. However, it is not breaking out of its base—it is already in an uptrend. This adds some risk. The overall market also adds significant risk due to potential volatility affecting every stock. If I were to open any position, I would place a stop-loss not further than 3% below the purchase price and buy very small positions—maximum of 5% of the account size.
- Maximum Position Size of a Portfolio, %: 5
- Maximum Favorable Buying Price: 112.37
- Stop-Loss: 109.00
- Position Risk, %: 3
FTAI
- Next EPS Date: 25 April
- Industry Rank (X/197): 38
- Stage (1-4): 2
- Base Type: Flat base
- Base Depth, %: 14
- Up/Down Ratio: 1.4
- EPS Trend: Up
- RS Rating: 98
- RS Trend: Up
- Institutional Ownership Trend: Up
- Pros:
- Earnings are growing rapidly.
- The stock is clearly outperforming the market; RS trend is up and RS rating is 98, which means that only up to 2% of the stocks in the market might perform better.
- Cons:
- The price of the stock is trending and the trend is old and obvious, which might mean it could turn downward at any moment.
- Industry rank is 38 out of 197. It would be better to be in the top 20 or so; 38th place suggests the stock is a loner in its industry performance-wise, which could add some headwind.
- An earnings release is coming up soon, which has historically added risk to the price action.
- Comments: We could open a small position and then place a stop-loss just below it. At the time of this writing, the price of the stock is at its EMA-21 line. If it bounces up from there, there’s a good opportunity for further growth. If it breaks down, we need to get out quickly! It’s better to admit we are wrong than to lose money without a good reason.
- Comments (CAN SLIM, SEPA, etc): The company is strong and the stock price is advancing. However, sales growth does not quite fit the CAN SLIM criteria and the stock is not breaking out of its base.
- Maximum Position Size of a Portfolio, %: 5
- Maximum Favorable Buying Price: 70.03
- Stop-Loss: 67.93
- Position Risk, %: 3.00
terms and definitions
EMA 21 Calculates the 21-period exponential moving average, highlighting short-term trends.
SMA 50 Averages the price over 50 periods, showing medium-term trends without overemphasizing recent data.
SMA 200 Averages the price over 200 periods, revealing long-term trends by treating all data equally.
Industry Rank Investor’s Business Daily’s system that ranks industries 1 to 197 based on performance. It guides us in CAN SLIM TRADING towards leading sectors.
U/D Ratio Measures stocks closing up versus down. A ratio above 1.0 indicates bullish sentiment, important in CAN SLIM TRADING.
RS Rating Ranks a stock’s performance on a 1 to 99 scale. I look for at least 85, showing strong momentum and growth potential.
RS Line Compares stock price to the market, plotted as a ratio. We seek an uptrend, indicating outperformance and strong momentum.
Volatility Measures how much a security’s price fluctuates over time. High volatility means large price changes, indicating risk and potential reward.
Institutional Ownership Trend indicates whether the stock is under accumulation or distribution by the institutions.
EPS (Earnings Per Share): A financial metric calculated by dividing a company’s net profit by the number of its outstanding shares. It indicates the amount of profit attributed to each share of stock, serving as a key indicator of a company’s profitability.
Overhead Supply: is a stock market term for a large amount of unsold shares at a certain price level, acting as resistance that prevents the price from rising. It occurs when investors looking to sell at break-even points add to the supply, making it hard for the stock to increase in value until this excess is bought up.
Stage 1: Basing or Bottoming Stage
Definition: A period following a stock’s decline where it starts moving sideways, forming a base. This stage signifies the easing of downward pressure and the beginning of stabilization, indicating that the stock is not in an uptrend yet but is preparing for potential future growth.
Stage 2: Advancing or Uptrend Stage
Definition: The phase in which a stock breaks out of its base on significant volume, indicating a strong buying interest and the initiation of a new uptrend. This stage is considered the most opportune time for investors to purchase the stock, as it is expected to achieve substantial gains.
Stage 3: Top or Peaking Stage
Definition: A stage characterized by the stock beginning to exhibit signs of losing momentum after its upward movement. The stock may start to move sideways with increased volatility compared to Stage 1. This suggests the stock might be reaching its peak, and the existing uptrend could be weakening.
Stage 4: Declining or Downtrend Stage
Definition: This final stage occurs when the stock breaks down from its Stage 3 pattern and enters into a downtrend, marked by a sequence of lower lows and lower highs. It signifies that selling pressure has surpassed buying interest, usually serving as a signal for investors to sell the stock to mitigate further losses.
Conclusion: Your Strategic Move
Navigating a correction isn’t easy, but with the right strategies and a keen eye on standout stocks like IBKR and FTAI, you can potentially turn a market downturn into an opportunity for growth. Are you ready to adjust your strategy and make the most of these conditions? Or better yet, are you prepared to potentially watch your portfolio rise as others remain cautious? As always, stay informed, stay prepared, and most importantly, stay proactive—the next rally could be just around the corner, and you’ll want to be ready.
