Trading Resolutions for 2026 - Stockscores Perspectives for Dec 22 2025
Stockscores Foundation for the week ending December 22, 2025
In this week's issue:
In This Week’s Issue:
- Market Outlook – Base Building
- This Week’s Market Minutes video – Beginner Stock Trading Mistakes that COST You Money
- Trader Training – Trading Resolutions for 2026
- Strategy – Pullback Breaks
Market Outlook – Base Building
Tech stocks have been stuck in a sideways range over the past two months and that has dragged down the broader market indexes. However, as the volatility compresses, we are approaching the point where the long term upward momentum may continue. The Small Cap stocks are now leading the large caps in the US and the Canadian market is beating them all with strength in Precious Metals doing the heavy lifting. Trading action is slower as we approach the holidays but opportunities exist if you focus on the most liquid, abnormal stocks with high quality chart patterns.
This Week’s Market Minutes Video – Beginner Stock Trading Mistakes that COST You Money
Most beginner stock traders lose money because they make predictable mistakes. In this week's video, I highlight some of these mistakes and how to avoid them. Then, my regular market analysis to figure out if a market crash is coming. Finally, the trade of the week on LAZR.
CLICK HERE TO WATCH ON YOUTUBE
https://youtu.be/4NJNhzuDS1k
Commentary – Trading Resolutions for 2026
The end of the current year and the start of a new one is a good time to reset our approach to many things, including trading. Here are 8 Trading Resolutions that I think will help you in 2026.
Don’t Chase Parabolic Trends
A parabolic trend occurs when price runs away from a trend line drawn across the lows in an upward trend. This steepening of the trend occurs because investors are emotional and chasing the stock’s price higher. It is a sign of irrational behavior.
I have never seen a parabolic trend that did not correct downward eventually. Buying when price has run up and away from the trend line is risky. It is better to wait for the pull back to the trend line. However, it is most tempting to buy when price is running quickly higher because the price action arouses our fear of missing out. Don’t do it.
Trust Data More Than Your Brain
It is very common for traders to make decisions based on what has happened to them recently. For example, if you are trading a strategy and go through a period when the strategy loses, it is easy to think that there is something wrong with the strategy. Since the perception is that something is wrong, you begin to change the strategy rules.
Let’s assume that the strategy was developed after testing over a large number of trades. If the testing of the strategy found that it was profitable over 1000 trades, why would you not trust the rules simply because it lost on the last 5 or 10 trades?
Put another way, we know that if we toss a coin 1000 times, we should get 500 head and 500 tails. However, that does not mean that we can’t toss a coin 10 times and get 8 heads out of 10.
The truth is told in large data sets. Our brains make interpretations based on small data sets that are most recent in our memory. Trust data, not your brain.
Trade Within Your Risk Tolerance
A trader’s greatest enemy is him or herself. Our emotions are what cause us to fail in the stock market.
The biggest reason our emotions play a role in our decision making is our emotional attachment to money. More succinctly, it is our desire to feel pleasure and avoid pain. That means we are emotional in our quest for profits and our avoidance of losses. We chase after marginal opportunities because of our fear of missing out and we don’t sell our losers because it brings us pain.
You can work toward overcoming these emotional problems by trading within your tolerance for risk. If it bothers you to lose $1000 on a trade then take a smaller position. Your position sizes, and their risk exposure, should be at the point that you sleep without thinking about how much you might lose if the trade does not work.
For some people, particularly new traders, that risk amount is $0. When you are learning how to trade, use my simulator at Tradescores.com so you can practice with no financial risk. This will allow you to gather experience and build confidence before you risk real money.
Don’t Argue with the Market
The market will often do things that don’t make sense. This happens because you don’t have all the information to explain what the market is doing. The market is made up of millions of people with trillions of dollars at work. Decisions are being made every micro second based on new information that investors receive.
The stock market isn’t fair because some people get information before others. They then act on that information, creating the market action that does not make sense to those who don’t have the information.
Not understanding why the market is doing something doesn’t mean the market is wrong. The market is always right, it is just our interpretation that can be wrong.
Plan to Lose
I have never met a trader who is right all of the time. You can make a lot of money in the market by being wrong more than you are right. The key is how you balance the size of your winners with the size of your losers.
This is an often-used cliché in trading but so important. Stop your losses and let your profits run.
Add to Your Winners (Never to Your Losers)
I like to add to my winners. A stock trade that is working shows me that my analysis was correct. In this case, I will add to my position each time I see a new entry signal as the stock moves higher.
A trade that is not working shows me that my analysis was wrong. Why add to a position when, thus far, I am wrong?
Although this seems like obvious logic, far more people average down on losing positions than add to winning positions. We would rather sell our winners because if feels good. We try to buy more of a loser with the hope that they will eventually turn around and we can escape the pain.
Unfortunately, adding to losers usually means more pain. Not getting the most out of our winners leaves us trading below our profit potential.
Follow Abnormal Activity
Almost every stock that makes a market beating return starts its run higher with abnormal price and volume activity.
Not all stocks that trade with abnormal market activity go on to make market beating returns.
To be successful in trading, look for stocks trading abnormally but also learn how to focus in on those with the best potential. (I can teach you my methods, go to www.stockscores.com/learn for more information).
Pay Attention When the Market Doesn’t Make Sense
I love to find stocks or markets that are doing things that make no sense to me. These are opportunities because they are situations where some people are trading on information that is not widely known. When the entire market of investors learns of this information, the stock or market will move even higher.
Consider this example. A Biotech stock goes from $5 to $7 in one day and trades three times its normal volume. A check of the news shows that the company has a lung cancer drug under development but has not announced any news on how well that drug treats lung cancer.
There is no news to support the trading activity in the stock. However, the market activity is telling us that some investors have some new information that justifies them paying a higher price and doing so aggressively by the increased number of shares that are being bought.
2 weeks later, the company formally announces that a larger Biotech company has offered to buy the company for $20 a share. The stock immediately gaps up to $20.
The stock market is not fair. There are always some people who have better information than others. In this example, some people had at least heard the rumor that there may be a buyout. For the rest of us, the trading activity made no sense.
Go look at the charts of stocks that have made big news announcements that caused their stocks to make big moves. You will find that most of them had abnormal trading activity before the news came out.
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Strategy of the Week - Pullback Breaks
Stocks that have upward momentum can be bought on the break of pullbacks in the upward trend. This week, I ran the Abnormal Breaks scans and look for the stocks breaking pullbacks as a sign that they were going to continue their upward momentum.
1. IVVDIVVD has been going sideways for the past 6 weeks after making strong gains since August. Support at $2.20.
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2. QBTSQBTS has been in a pullback since mid October but breaks that pullback from a rising bottom, indicating a good potential for the stock to get back to its recent highs. Support at $23.75.
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3. MBXMBX breaks its short pullback after coming back down to the upward trend line, giving it a good potential to resume the upward trend. Support at $27.
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