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Rewind The Clock 🕛️ 

Have you stayed up to date with the market?

1. We’ve had a subpar earnings season thus far.

   • CRWD crashed the party with their security breach

   • NVDA and META were green after the earnings announcement but did not follow through because the general market was weak.

   • NVDA is a tougher trade now after its stock split. It gapped 4points on decent earnings. Pre-split that is a 40-50 point move.

   • ASML has missing orders

   • Chip and AI stocks could be hurt the most. The time to value companies will come.

2. Powell and the Fed have continued pushing rate outs out further. As we stated in early 2024, the market is calling his bluff.

   • How do I know? When he said, “Hold rates and rate cuts soon,” the market continued higher in March. When he says it now, every bullish moment has faded.

3. Trump was shot, which I don’t believe was 100% legit.

4. The Bank of Canada was the first to cut rates.

5. Biden has stepped down from the presidential race.

6. Fed rate cut talk has become a serious topic.

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#1 Strategy You Must Master to Beat the Market: Knowing When and When Not!

Market participants,

In the complex world of investing, countless strategies are touted as the key to beating the market. Some advocate rigorous technical analysis, and others advocate value investing or momentum trading. While each of these strategies has its merits, there is one overarching skill that every successful trader must master: knowing when to act and when not to.

The Importance of Timing

Timing is everything in the stock market. Making a move at the right time can lead to substantial profits, while poor timing can result in significant losses.

For example, if Trader A is bullish on Tesla but chooses to buy after Elon announces the Robo Taxi release date, they would have had great returns for a few days as the initial reaction was bullish. If they continued to hold after one week, all gains were wiped, plus another 10-15 points.

Is Trader A a bad trader? No. He had a good idea but bad sense of timing.

Now Trader B is Bullish on TSLA, hears the news, but gives it a day. After a day of sitting, Tesla hit resistance, and Powell’s interest rate comments are coming soon. Seeing how the general market is turning, he DOES NOT enter long on Tesla. Trader B realizes that the Fed has not changed its interest rate approach and sees the market become neutralized. Therefore, he opened a bearish position on Tesla. A few days later, he had a positive position after Tesla dropped over $20.

What’s the difference between the two? Timing.

But how do you know when the time is right? The answer lies in mastering your mind.

Mastering Your Mind

Your mind controls your body and emotions. In the high-stakes world of trading, emotions like fear and greed can cloud your judgment. If you don't master when to react and when to stay put, you can't succeed in the market. It's about discipline and emotional control as much as it is about market knowledge. Market knowledge is more than X’s and O’s. It’s about understanding the general context of economics, politics, and risk management.

Knowing When Not to Act

Understanding when to hold back is just as crucial as knowing when to dive in. Here are some cues the market might give that suggest it's best not to react:

• High Volatility: When the market is extremely volatile, it's often wise to stay on the sidelines until things stabilize.

• *Unclear Trends: If market trends are not clear, it's better to wait for a more definitive signal.

• Emotional Decisions: If you find yourself making decisions based on emotions rather than facts, take a step back.

Knowing When to Act

Conversely, there are times when the market signals that it's time to make a move:

• Strong Trends: When you see strong, clear trends backed by solid data, it might be time to take action. Especially when backtests occur and support is held.

• Economic Indicators: Positive economic indicators can be a good sign that it's time to invest.

• Company Performance: Strong performance reports from companies can signal a good time to buy or sell.

The Art of Patience

You don't have to trade every day or even every week to be a great trader. Some of the best traders take weeks off after a great trade, allowing the market to settle and providing time to reset their strategies. Patience and discipline are essential components of a successful trading strategy.

Conclusion

In conclusion, mastering the art of knowing when and when not to act is crucial to beating the market. While many strategies could take the top spot in a trader's toolkit, the ability to control one's reactions and emotions will always be fundamental to success.

Keep learning, stay disciplined, and remember: it's not about trading often, it's about trading smart.

Until next time.

Though it can feel like the sky is falling during volatility, the market is always setting up for opportunities, bullish or bearish. This bearish selloff was a golden opportunity for bears. I am not as bearish as most, so my plan is below!

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