Category: Commentary

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This week marks ten years since the bottom of the Great Recession in March 2009. Since then, the S&P 500 has almost quadrupled (total return), Google is up 6x, Apple is up 9x,  AMZN has gone up more than 20x, and Netflix is up 54x (after experiencing an 80% drawdown along the way).

In March 2009, the market was in panic mode. Many stocks were trading like their companies were going out of business. This is why many of the best performers in the past decade were under $5 per share (some were even under $1 a share). Bear markets create incredible long-term opportunities, but most people are not psychologically equipped to take advantage of them. Holding big winners for the long-term is never as easy as it seems in hindsight.

In the past decade, there are 235 stocks that went up more than 1000%.

Out of them, 81 gained more than 2000%.

Out of them, 42 increased more than 3000%.

Out of them, 14 rose more than 5000%.

With returns like these, who needs angel investing?

Here are the top five performers for the past decade:

1.PATK +21,546%

2. JAZZ +15,010%

3. NXST +14,713%

4. MGPI +10,940%

5. MITK +10,720%

Check out my latest book: Swing Trading with Options – How to trade big trends for big returns.

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I ran a screen looking for relatively liquid ETFs with a relative strength above 90. A few themes stand out: palladium, gold, Brazil, marijuana, and software.

This list can tell us how financial markets are seeing the world in the next six to twelve months.

Two of the leaders are precious metals that typically go up when inflation and political turbulence expectations rise. What’s even more interesting is that palladium and gold have risen despite of a relative strong U.S. dollar.

Brazil has a new President, who is supposedly pro-business.

Marijuana is a brand new industry that is just entering the investable universe of many money managers. It could also be just another fad. No one really knows. Things always look easy and clear in hindsight.

And software, which has been leading since early 2018. – the upgrade cycle in the corporate world continues with full force. One sector’s rising expenses are always another sector’s rising revenues. Enterprise software companies have been big beneficiaries in the past year or so.

Keep in mind that MJ, PALL, and PSJ are the only non-leveraged ETFs on the list. Leveraged ETFs are good short-term trading instruments. They are rarely good long-term investment vehicles. In fact, all leveraged ETFs are structured to lose money over time.

Check out my latest book: Swing Trading with Options – How to trade big trends for big returns.

All charts in this post are powered by MarketSmith

The big 5% Wednesday was followed by a strong intra-day pullback but a strong close. In the end, all major market averages finished near the highs of their daily range.

Overall, today was a big win for the bulls. There are more stocks setting up and looking constructively. With all positives in mind, it makes sense to continue to be cautious and to operate with the thesis that this is just a rally within an ongoing bear market, which means stay nimble and don’t hesitate to take partial profits on strength, often. From a technical perspective, SPY has room to run to 260 before it encounters a serious resistance.

Check out my latest book: Swing Trading with Options – How to trade big trends for big returns.