Bear Trap Confirmed: How Sidekick, Alpha Picks And Weekly Charts Helped You Buy The Dip Instead Of Getting Margin‑Called

My Take

You want to be invested for the best 10 days in the market each year. If you’re not, the market returns over time greatly diminish. I will also add that Charlie Munger said “Money isn’t made in buying and selling, it’s in WAITING”.

Steve Cress and the Alpha Picks portfolio has shown that fundamentally strong stocks will rebound faster and have larger gains during days like Thursday. My portfolio gains were UNREAL even with AAPL 0.00%↑ closing down.

And all week me hosting on Trendspider I was able to use Sidekick to predict the best earnings movers. 7% - 15% returns if you were that type of trader just based on simple Sidekick prompts every day. From an Alpha Pick on Monday with CLS 0.00%↑ to STX 0.00%↑ to AMZN 0.00%↑ to MSFT 0.00%↑, it was in top form all week so congrats to those who celebrate.

Chart of the Day - Sandisk SNDK 0.00%↑

$SNDK in the 4 hour algorithm. It got you out and saved you 22%, but the next buy in will be nice. As you can see below - over the last 17 months - the algorithm BEATS “buy and hold”

The 4 hour algorithm back tested for 17.4 months makes you 2520% vs. 2290% if you just bought and held. 25 trades over 17 months with a 50% win rate and an average win of 143%.

Get my 4 hour algorithm and 100 Sidekick messages PER MONTH for 1 YEAR

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Seeking Alpha’s Tool Kit

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Click the photo for more details - we’re in a dip right now on the portfolio

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New Quant Growth and Income Portfolio

I will have more about this portfolio in the first week in August, but I wanted to share that I do have an offer for you to save $50 off. If you’re concerned about the long term in the market, this portfolio over this downturn has returned over 11% since June 1. 30 high yielding names rebalanced every week for a more active portfolio focused around providing locked in income along with growth. Click the photo for more information.

Returns in the portfolio since 6/1. I’ll have my full review in a week or so.

Pod Notes

Those of you that were PREPARED - Again - one of those 4 words I’ve been using.

You may have read this on Wednesday at around noon.

A bear trap means a violent reversal to the bull market after a dip.

The setup describes a technical pattern where the QQQ 0.00%↑ opens with a 1% gap up but reverses to close negative while within 10% of an all-time high—a scenario that has historically led to higher Nasdaq 100 prices one month later in 100% of past occurrences since 2015.

Congratulations to those that saw this article, understood the assignment and bought the dip. I had a TON of people email me when this came out and said “could this be true?” I said YES and even brought it up on the Trendspider live on Wednesday night.

There is a reason for the market violent turn down on Wednesday that I will go over at the END of this podcast.

Let’s start out with a little recap of the week in the markets.

The Fed Meeting

The event was major - the reaction was thought to be the market selling off, but it wasn’t - I’ll get to that. They kept rates the same but there is market chatter that they will need to hike in order to reduce inflation.

Warsh is 100% focused on 2% inflation and the only way to do that is to raise rates. So that will be something heavily in focus at Jackson Hole in August and at the Fed meeting in September.

Earnings

I asked Seeking Alpha’s AI to give me a summary of the week’s earnings review and I’ll include this in the newsletter.

It brought up MSFT 0.00%↑ which moved the markets HUGE on Thursday

It also brought up $META in the huge decline.

The key is whether earnings were bullish - but it identified - SELECTIVELY BULLISH.

86% earnings beats and 80% revenue beats and the markets PEG ratio is at it’s most attractive level in 30 years - THIS IS A BULL MARKET.

But it did bring up the selling pressure and rotation out of semi conductors in to energy, industrials and other sectors.

You can see the full explanation here and I suggest using AI to get these types of summaries.

I don’t think there’s a limit on the Seeking Alpha AI messages like Sidekick has so you should be using it. Just like Sidekick it’s a “walled garden” so it won’t get slop from the internet. I’ve found it to be helpful with summaries, explanations and screeners. It does NOT give ANY financial advice and is much more cautious about it than Sidekick.

Sidekick continues it’s winning ways

First off I had mentioned in Tuesday’s office hours - Sidekick identified $AMZN as the best setup for the week. This is the 2nd week in a row I think - I’m not keeping track - but WOW. RIGHT AGAIN.

A screenshot from Tuesday’s Office Hours session

I hosted Trendspider’s earnings all week and each night I asked Sidekick the winners so let’s review:

Monday - I asked it to rank the potentially best winner - it identified CLS 0.00%↑

FYI - it popped over 11% on the move

$CLS in the 4 hour algorithm in Trendspider showing a BUY right after earnings.

Tuesday - Same question - answer STX 0.00%↑ - up 7.4% after the earrings - MEMORY TRADE - but memory took a dump? Again - I’ll get to it in a bit. $BE turned out to be the big winner so while it didn’t pick the biggest - $BE was exceptional and it identified that after.

$STX in the 4 hour algorithm - but clearly buying at the close of the day on Tuesday BEFORE earnings and the open close of Wednesday - GREAT TRADE!

Wednesday - I think it deleted the sidekick message but it did pick MSFT 0.00%↑ - BOOM - you saw how it reacted and then I asked it to pick a winner for the next year - it said MSFT 0.00%↑ .

$META vs. $MSFT - which one does Sidekick think is a better 1 year investment and why.

$MSFT in the 4 hour algorithm. Pointing out the HUGE gain when Sidekick picked it as a good risk/reward on earning.

Thursday - BOOM - AMZN 0.00%↑ - it had identified it earlier in the week - it identified it again!

I even asked it to see if it was right and so those answers are worth reading

$AMZN 5 min chart in Trendspider - buying at close and then trading until it lost confirmation - a quick 13% gain - but I liked the earnings and I’m holding this stock.

So what’s the point here?

I think I’ve shown how Sidekick over a year now has proven itself. It makes mistakes but many times it gets things spot on. Why? Because Trendspider has a walled garden of data that it looks at. It acts as a Wall Street analyst and has more than a Bloomberg Terminal of data to sift through and then uses its expertise to make judgments and gives you those assumptions.

Using the tool has made me a far better investor and the deal I have negotiated with Trendspider is for 100 sidekick messages per month which is PLENTY. Use this link and save SO much money and get my 4 hour algorithm too.

Click the photo to find out more. This week alone could have made you enough to pay for the entire yearly subscription.

It saved me on several of these downturns where I lost less money than most folks. That’s the key - it’s not just about making money - it’s about protecting yourself.

Alpha Picks and the Pro Quant Portfolio Performance

Steve wrote to the Pro Quant people and I’m sure he will write to the Alpha Picks folks today with the weekly recap. He addressed the recent downturn in stocks because not only did Alpha Picks get hit - but the Pro Quant portfolio did as well.

He emphasized that he’s a believer in momentum investing which is what both of these portfolios focus on. The recent downturn in some of the biggest winners is what affected the short term performance.

He pointed out the Nasdaq approached correction territory and the sector concentration of the portfolio is what hurts the portfolio in the short term.

Click the photo if you have the Pro level to read the letter to subscribers

He also focused on the Quant ratings. I may not promote this as much but Quant ratings are NOT predictions of the price of a stock. The Quant ranks stocks against its peers and tells you “this is best in class based on these 5 factors”. Many times it does indicate the stock move will be higher but it’s NOT meant for that.

He brought up a sharp decline doesn’t automatically trigger a Quant rating drop.

Remember - he has used the Quant rating for years and it’s statistically proven to beat the market in the past so for me it’s a VERY useful guide - but nothing in the market is an absolute.

If the volatility scares you - maybe the Growth and Income Portfolio is a better fit

So I’ll be doing a review of this in the next few weeks, but the Growth and Income Portfolio is actually up 6% in 1 month. They rate it against the Vanguard High Dividend Yield fund

Over 1 month the portfolio is exactly what it’s meant to be - a barbell approach that’s more actively traded and provides income with growth

A look at $VTM vs. $VOO - the Vanguard Growth and Income (which you see the Seeking Alpha Portfolio BEATING above) is actually outpacing the S&P 500 - so this strategy may make sense for some people.

There are 6 stocks that have returned over 21% since the portfolio was created on 6/3. All 6 of them started with the initial launch of the portfolio and I’ll give you 1 right now.

RLJ 0.00%↑ - notice in yesterday’s rally - this didn’t participate.

STRONG BUY in the Quant - up 5.67% in 1 month and a dividend payment on 6/30

Ironically the 4 hour algorithm trades this one REALLY well for the last 4 months making HUGE gains with that dividend payment too.

The portfolio looks to factor in dividends and growth. It’s an equal weighted dividend that they rebalance every week similar to the Pro Quant Portfolio.

Again - I’ll have a review in a couple of weeks on it, but a portfolio like this perhaps fits some peoples goals who might be more afraid of the volatility of the Pro Quant Portfolio or the Alpha Picks portfolio.

Alpha Picks and Pro Quant performance over time. Both long term are beating their indexes.

Alpha Picks YTD - I’m okay making this amount as it’s been outpacing my own personal portfolio.

Alpha Picks over 1 month - PAINFUL - but not the end of the world as it was WAY up yesterday thanks to many of the top holding % stocks up as much as 30%

Alpha Picks over 1 year. I’m outpacing this in my own portfolio by over weighting some stocks. But it does mean I was losing MORE over the last month than the portfolio. That’s my own personal risk but you can just hold the holding % and match this performance.

The Pro portfolio YTD is still outpacing the index even with the extreme downturn over 1 month. It’s also beating $VOO YTD.

This was a painful month for the portfolio. But because the portfolio holds and buys only STRONG BUY stocks, those fundamentally good stocks should outperform as the market recovers.

Which portfolio is best? That’s a personal choice. Will Growth and Income portfolio beat Alpha Picks? My personal opinion - I like Alpha Picks - but I’m okay with the volatility and I don’t mind losing 20% in a month for the possibility of outperforming long term. Nothing is guaranteed.

But make no mistake - Alpha Picks STILL KILLS IT. Up 18% YTD

And if you don’t have Alpha Picks and just Seeking Alpha

Here’s an article from Steve Cress posted yesterday with full analysis of 4 stocks that were each up between 17% and 26% yesterday alone. Again - Steve’s point is that quality fundamental stocks will rebound faster and greater because they have great fundamentals. This is the theory on buying the dip on quality stocks.

The Memory Trade

The ones I own were silent yesterday

SNDK 0.00%↑ - up 26%
MU 0.00%↑ - up 18%

Then AAPL 0.00%↑ and AMZN 0.00%↑ earnings call said they will spend significantly more specifically on memory in Q4. POINTING OUT THE CONTINUED BULL MARKET.

But just be warned - the technical damage was done. I still don’t like the weekly charts of these but I have my full positions at lower basis and will likely wait for a while to add to these positions, but I’m confident they go higher.

So what caused the markets to dip this week

It wasn’t earnings and I don’t think it was the Fed. I think it was the unwind of this hedge fund run by whiz kid Leopold. Citadel wound up buying all of the assets but the violent turn down in all of his names is really the reason so much of the high flyers went down. We don’t know what exactly he held as 13F’s are lagging, but there was word the banks called in margin calls with the downturn.

And Seeking Alpha points out - it’s not the only reason - I went over all of these before.

Use Weekly Charts to trim

I don’t think it’s a green light right now as the market is still shaky and we are heading in to a seasonally weak period. My best guidance that I’ve been giving is to use those weekly charts and if the indicators like the MacD are extended - there’s nothing wrong with locking in some profits.

I did that with AAPL 0.00%↑ last week at $317 and I plan on buying it back under $300 because it is historically weak in August.

Remember - have the tools and be prepared

The tools I have between Seeking Alpha, Alpha Picks and Trendspider all allow me to stay cool and calm during these periods. Risk tolerance is not tested on the way up - it’s tested on the way down.

If you panicked or made any decisions you regret during this time, I’d urge you to journal and find tools that allow you to make better decisions.

Yesterday was a historic move and most likely one of the best 10 days we will see this year (if there are better ones to come - goodness you should be invested).

Click the photo to read the entire article. If yesterday wasn’t a top 10 day - imagine what the rest of the year will be like with 10 better days!

Next Week - no podcasts likely

I’m going to do sporadic next week because I am traveling to New Jersey. I will try and do an office hours, but I probably won’t have a computer with me so it might be rather tough.

Remember - I’m going to the Wolf Happy Hour on Monday so if you’re in NYC and want to go - it’s free.

So if I’m gone all week - have a great week.