24% return today, the new Early Riser day trading strategy
Stockscores Foundation for the week ending April 15, 2024
In this week's issue:
In This Week’s Issue:
- April Webinar Videos
- Market Outlook – Inflation Still Hindering Markets
- This Week’s Market Minutes video – Stock Market Weakness, is this the Start of the Big Market Crash?
- Trader Training – The Early Riser day trading strategy
- Strategy – Abnormal Stocks
April Webinar Videos
- Simple Strategies to Find Hot Stocks and Avoid Stock Market Crashes
- Day and Swing Trading for Full or Part Time Income
- How to Invest in the Stock Market Successfully
- How Stockscores Tools and Education Can Help You Make Stock Market Profits
Market Outlook – Inflation Still Hindering Markets
A strong CPI number this past week made investors concerned that persistent inflation will cause the US Fed to keep interest rates where they are rather than start a process of lowering them. That has helped commodity sectors like, Gold, Silver and Oil but the general market is hindered by the weak bond market and persistently high interest rates.
The best strategy in this market is to either trade the hot sectors (commodities, AI, Crypto) or short term trade the Alpha stocks (those trading with abnormal volume, price appreciation and high liquidity). Be defensive with longer term holds of stocks not showing optimism on the chart, in the form of rising bottoms.
I don’t see strong signs that there is going to be a major market correction yet, investors seem to just want to sit on their hands and be patient for interest rates to start to fall.
This Week’s Market Minutes video – Stock Market Weakness, is this the Start of the Big Market Crash?
Weakness in stocks this week has many wondering if we are starting a corrective phase that could lead to a stock market crash. This week, I provide my analysis of the stock, commodity, currency, and bond markets to assess that possibility. Plus, I highlight the trade of the week on INDO.
Click here to watch this week's Market Minutes video: https://youtu.be/l_I7O7ygqJs
Commentary – The Early Riser Strategy
I like to buy strong stocks when they reverse short term weakness. This is effective because the stock has upward momentum but the pullback in the upward trend provides a better relationship between reward and risk. The Early Riser day trading strategy is a new way to take advantage of the hot stocks of the day with entries early in the upward trend.
One of the great benefits of this strategy is that most of the entry signals come early in the trading day. It allows me to take positions early and then not be nailed to my trading chair for the entire day. I can monitor my holdings from my phone or iPad and exit positions, even if I am not in front of my computer.
Here are the trades I identified today, in the opening two hours of the day (as I am writing this).
- PLL – buy at 9:54am ET. Went up as much as 2RR (reward for risk) but then fell back to hit stop at break even. Position size for $100 of risk was $1624 but marginable at 3 to 1.
- SPCB – a swing trade from last week that has been doing really well, it also triggered an Early Riser entry signal today at 10:08am ET. For $100 of risk, the position size was $1906 and this stock triggered an exit signal at 4RR at 10:24am ET. This meant a $400 profit for every $1906 in capital, a 20.9% return in 16 minutes.
- KAVL – this one came alive a little later in the morning with the Early Riser buy signal at 11:10am ET. $100 or risk required a $1206 position. Sell signal at 12:04am ET on a break of the upward trend for 3RR, giving a $300 profit for every $1206 of capital used, a 24.8% gain. Since this stock is priced above $3, most brokers will allow 3:1 leverage meaning the actual capital required for this trade was only $402, making the return on capital required 74.6%. While commissions and slippage will have some effect on the profitability, the return is still very impressive.
Over these three trades, there were two winners and one break even. Total capital required for $100 of risk, using margin, was $2850. Profit was $700 for a return of 24.56%. Commissions and slippage would be between $50 and $100 for most traders. A trader who uses a $500 risk tolerance per trade would use $14250 in capital and earn a gain of approximately $3500. All of these concepts are taught in the Active Trader course material on Stockscores.
Stockscores Active Trader members can look forward to a new video lesson in the Education Center to come very soon that will outline the rules and process for this strategy. Of course, new strategies are free upgrades for existing Active Trader members.
Current Active Live subscribers have been trading this strategy for the past couple of months and have watched how I define new strategy rules, test and develop the strategy and create the tools for identifying opportunities in a timely fashion.
If you would like to utilize this strategy, register for the Stockscores Active Trader membership (use the discount code 500ATA24 to receive $500 off, expires April 18th). With the membership, you will receive access to all of the content in the Stockscores Education Center, the tools of Stockscores and a free month of Active Live where I call out trades like these each day. No experience necessary, just the desire to learn and take advantage of the opportunities the market gives each day.
Register at this page: https://www.stockscores.com/trader-training/
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Today, I ran a Market Scan seeking stocks that are making an abnormal price gain, with abnormal volume and at least 10,000 trades. 19 stocks were found. Here are three that I think should be watched for good price pattern breaks in the day ahead:
1. ICCMICCM has broke upward from a rising bottom today, breaking a pullback in an upward trend.
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2. HUBCHUBC has been in play for about a week and came alive again today with very strong volume
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3. PROKPROK is trading abnormal volume today and breaking through resistance at $1.75 that has held up for a few months.
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