Trading Lesson of the Week

• September 14, 2025
• BLNE | DLTH

In This Week’s Issue:

• Market Outlook – Game On
• This Week’s Market Minutes video – THIS Will Change Your Approach to Stock Trading Forever
• Trader Training – Trading Opportunities Arise When THIS Happens
• Strategy – Hot Stocks Coming to Life

Market Outlook – Game On

Most of August was slow for trading after a decent month of July. Coming into September, I was worried that this slowdown could lead to September weakness, since September is historically the weakest month of the year for the market. That concern was unfounded as we have actually see a surge in short term trading opportunities. The emotional crowd of retail traders is back to chasing small cap, low float stocks higher, giving good opportunities for day traders. Longer term trading is still a bit slow but it is improving as we come into the traditionally strong time of year for the market, October till May.

This Week’s Market Minutes Video – THIS Will Change Your Approach to Stock Trading Forever

A simple shift in mindset can improve your performance in stock trading quickly. This week, I highlight how stock trading differs from investing and how understanding this difference will allow you to be more successful as a trader. Then, my analysis of the stock, commodity, currency and bond markets and the trade of the week on ISPC.

CLICK HERE TO WATCH THIS WEEK'S VIDEO ON YOUTUBE

https://youtu.be/SmSVSU37nsU

Commentary – Trading Opportunities Arise When THIS Happens

Most of the time, the stock market is rational. Prices reflect the collective judgment of investors digesting all available information about a company’s business, financial health, and industry outlook. For traders, this efficiency means that profitable opportunities are relatively scarce—if everyone knows the same information, then it is already priced into the stock.

The best opportunities emerge when something changes—when important, new information begins to be priced into a stock. In these moments, the market is temporarily inefficient. Those who are closest to the company, such as well-informed institutional investors or industry insiders, will often act first. They aggressively buy or sell because they have access to new data, insights, or developments before the broader investing public.

For the attentive trader, the key is not necessarily to know what the new information is, but to recognize the footprints it leaves behind. These show up as abnormal trading activity—a surge in price movement, trading volume, or both, that stands out from the stock’s normal behavior. Such abnormal activity is a signal that new information is being factored into the price, and it provides an opportunity to ride the wave created by those with an informational advantage.

What makes abnormal trading activity even more powerful is the crowd it attracts. Once a stock begins to move abnormally, it catches the eye of active traders scanning the market for action. Momentum builds as more participants pile in, and emotional forces like the fear of missing out (FOMO) push the price even further. In many cases, the stock will advance beyond what the new information truly justifies, creating outsized profit potential for those who identified the abnormal activity early.

What Traders Should Look For

To separate high-quality opportunities from false starts, traders should focus on three key factors:

1. Abnormal price gain with abnormal volume – A sudden price increase only matters if it comes with a clear surge in trading volume. The combination shows that large, informed market participants are acting decisively.
2. The abnormal break comes after a quiet period – If the stock has been trading with low price volatility and then suddenly surges, it suggests the market is genuinely surprised by new information. Quiet periods followed by abnormal breaks are especially powerful signals.
3. The abnormal break is not into a longer-term downward trend – If a stock is locked in a major bearish trend, pessimism usually dominates. Sellers will often use rallies as an opportunity to exit, limiting the stock’s ability to sustain upward momentum. The strongest abnormal breaks happen in neutral or positive longer-term trends.

Final Thoughts

While most stocks are fairly priced most of the time, the real edge for active traders lies in spotting the exceptions—those moments when the market is in transition and abnormal trading activity reveals that new information is being priced in. By recognizing the right conditions—abnormal price and volume, occurring after quiet trading, and not fighting against a bigger bearish trend—traders can align themselves with the most informed participants in the market and take advantage of the powerful momentum that follows.