COPY This SIMPLE 6-Rule Trading Strategy For HUGE Moves

You'd be surprised at how many people couldn't follow this because they let their opinions get in front of the market. This had a perfect setup. We're looking at 60, 70% move off this level with a very tight stop. At worst, I lose 5, 6%, less than 1% of the AUM versus what can I get? Multiple, multiple multiples on my risk. This moves up 70%. It's really simple, yet not many people can follow it. And you think you're smarter than the moving average. If you size it right and you manage the trade correctly, you only need a handful of these a year to have an awesome year. Everyone says buy low, sell high. How about buy high, sell higher? These are the stocks that can really move your account. You take a bunch of small losses, and then if you catch one of these stocks, it covers all that.

This professional asset manager manages $50 million at just 25 years old. Introducing Connor Bates.

If you don't have a formula, if you don't have a system, then how are you gonna be selective? It's so simple. You have a big move up, you have a pullback, you have an expansion, you get 30, 40% in 5 days.

In this episode of Chart Fanatics, Connor breaks down The exact step-by-step process to identify and follow parabolic moves in the stock market.

Anyone can kind of throw a dart and make money, right? But in a hot market, if you want outperformance, you need to be in the best movers. If you're buying this, you're looking at pretty tight stop for a stock that is a very fast stock. I could see some people saying it's hindsight when you see that, but it's not. You can see this stuff real time. These are going to be your best opportunities to make money. This was up 22% on 400% above average. This isn't your Aunt Sally buying Bloom Energy. This is a change in character because Wall Street has to re-rate the stock.

He takes us through his entire process to identify the largest movers in the market. All this and more on this special episode on Chart Fanatics.

What are the main hurdles that come to mind when trying to be effective in its execution? Is there anything that you really have to be sort of aware of or manage trying to execute this on a On a regular basis.

So one is being—

Before we keep going into this episode, just remember you can get every single episode, a free PDF with the full strategy breakdown, including all the rules and everything for you to keep for free. chartfanatics.com, put your email in and you can have the full library of every episode of Chart Fanatics and every guest and every strategy. Most of all, make sure you test those strategies so that you can see how you would perform Over on NinjaTrader, it's a free two-week trial to simulate these strategies. The links for both NinjaTrader and ChartFenix.com are in the description below. Go check it out, and let's continue with this episode.

Thank you for being here, and where is best to begin?

So, best to begin is the why for this, and the why for this is because every market cycle there's those outlier stocks that make. the massive moves. And I wanted to figure out what that looked like from a price-volume characteristic standpoint, and then also from a fundamental standpoint. And Jesse Livermore always says, the tickers change, but human emotion never changes. And so to me, these stocks have been repeating this for all the way back, going back 50 years. And it's similar to CAN SLIM, but I added a couple things that I found Some minor differences, but it still stems from the overall, you know, what does a growth stock look like before, during, and after the move, and how can we capitalize on that? Because these, these are the stocks that can really move your account, and these are what we're looking for because these are the ones that, you know, you know, you take a bunch of small losses and then if you catch one of these stocks, it covers all of that and in between.

Well, I'm looking forward to it. I'm sure the audience is as well. So what would be the first step that we are looking to break down?

Yeah, so the first step. So there's a couple things. So we can say the super stock criteria, and number one is very important, and that is large daily, weekly base. And why is that? And that's because when you look, when you go back and study a bunch of big moves, they typically start from a big base. And that's because the stock has gone through the proper supply and demand characteristics. Sticks. It's shaken out weak hands, and then you can start to see volume footprints. Institutions might be accumulating the stock. And again, the bigger the base, the higher in space. And I truly believe that because stock moves up, that's that momentum phase, and then it can spend weeks, months, even years in a consolidation. And we don't want to buy the consolidation. We want to buy when it breaks out of that consolidation. So that's That's number one. And then number two is, is it linear? I, when I'm picking a stock to trade, I want it to trade linear. And that's because, you know, choppy mean-reverting stocks, they're tough to hold. They don't give you that performance that you're looking for. And when you find a linear stock, you know, it respects certain moving averages and it's easier to hold and it respects like typical trend signals. And how do you find that? You look at the character of the stock. And this is looking back at previous chart history and saying typically when the stock breaks out of base, does it trend for a couple weeks to months or does it just revert back to the mean? So linearity is super important and it helps you, you know, narrow down your universe of stocks to trade. And then number 3 is liquidity. And this is another very important thing. And why is because typically the best stocks, the ones of each cycle, like you know the Sandus of the world or the Nvidia's, they're trading a lot of volume. And that's because number one, institutions are buying that stock. We want to follow institutions because typically they're the ones creating the base. And then and then once it starts to move out, you know it's better supported on pullbacks. And it's just yeah and and you can scale with liquidity. So. You know, we don't— I don't want to trade low, thin stocks. It's more so random versus the liquidity requirement, at least about $80 million daily dollar volume a day. And this can obviously change as your account grows and as you're managing more money because, right, if you know, if you're managing $1 billion, you're going to need more liquidity than that. But, you know, TurboTax right now, you know, just under $30 million. You know, we're keying in on stocks at least trading $80 million daily dollar volume a day.

$80 million.

Yes, about. And then, you know, typically, yeah, 80 to 100 is the sweet spot. And that's, that's what we're looking for. And then number 4 is ATR, and this is average true range. And I want to trade stocks that have a high ATR, and that's because these are the stocks that can move the needle, right? Mm-hmm. I don't want to buy Coca-Cola. It moves a percent a day. How am I going to get returns and do well trading that stock? But when you can find the stocks that you know, are moving 5%, 10% a day, they have the ability to really move your account. And these are the stocks that, you know, can move, you know, 100% in a month. And if you catch it at the right time and obviously with the ATR, you know, higher ATR stocks, you have to position size accordingly. They can be tougher to hold. But again, the beautiful thing about swing trading and position trading is we all have low win rates. Sorry. And so you can lose a bunch of times. But that one thing that you do catch that makes up for all the small losses and then some. And so that's average true range. And then number 5 is very important. This is hot theme, narrative, story, or group. So kind of these all tie in together. And

I was just sorry, I was going to say, in terms of the ATR, is there a particular average that you look for in terms of percent?

Yeah, typically at least 5%. So when I'm running my scans, you know, I'm typically putting a criteria at least 5% of average true range. And again, that just makes my— it makes my universe of stocks, it narrows it to the specific criteria that I'm looking for. And then number 5, this is super important. So we'll start with group. So William O'Neil, he created CANSLIM. Obviously this is kind of derived from CANSLIM, but he said, 50% of a stock's movement is derived from the industry group and the sector. And so basically what that means is that, right, so let's talk, for example, let's say memory stocks, right? SanDisk is a memory stock. Institutions aren't just going to buy SanDisk, right? They're going to buy Micron, they're going to buy Seagate, they're going to buy Western Digital. So when you start to see a handful of stocks setting up in the same industry group with similar chart patterns, To me, that's like the market screaming, like, pay attention, something's going on here and could be a big move brewing. And then hot theme, you know, every year for a certain period of time, there's that one big theme, right? Over the last couple of years, it's been AI, but there's so many subthemes in that general macro theme, like the bottleneck for energy, nuclear names. And so looking for like what's a big driver in the market right now? And then, you know, finding the subsectors of that driver. And then narrative also is just, you know, what's the market thinking about this? Is this a story that the market is looking ahead of? And this and that can help the stocks really accelerate to the upside. And then lastly, number 6 is a catalyst. And this can be multiple things. This could be an earnings release. I'll put ER. This could be a blowout guidance in their earnings report. This could be a partnership. So any, anything, any catalysts. And then, you know, after you get the catalyst, it's about what is the market reaction. So again, you have to analyze 2 things, right? You see the catalyst. What's the catalyst? Is it a massive beat and raise earnings report? And then again, like when the market opens, what's the reaction? Because You know, you can have the best catalyst, but if the reaction from the stock isn't good, that either means it's priced in or the market is forward-looking and doesn't think, right, they can hit those numbers in the future.

If you're a trader, you have to know about Chart Academy. Chart Academy is the first all-in-one free trading education platform. That's right. Absolutely free. No catch, no upsells, no links to sell you something. All free. Proven world-class traders providing an A to Z masterclass on their strategies, their concepts, and their processes that make them the best. From futures, options, crypto, stocks, and forex, everything is covered on chartacademy.com. Whether you want to fix your trading psychology or learn from a market wizard directly, you can do it all on Chart Academy. Not only that, by just spending time on Chart Academy and bettering yourself as a trader, you can get points that unlock exclusive discounts, free trials, and free accounts with your favorite prop firms and trading softwares. Don't take my word for it. Chart Academy is live. The link is in the description below. Now let's get back to the episode.

So this is really my main framework when I'm looking for stocks to invest in because, right, there's thousands of stocks. And if you don't have a formula, if you don't have a system, then You know, how are you going to be selective in picking the right names? And using this criteria helps me, number one, narrow down the universe of stocks that I'm looking at. And then number two is just looking back and doing the self-study myself. I realized all the big winners that I see in each market cycle, they typically always have each one of these characteristics. And why would I want to trade something else if it doesn't have it when most of the big moves Checked all these boxes.

That's perfect. And one question that comes to mind is, in terms of the group, when you're looking at the group, and so like to your example, SanDisk, for example, the other companies that fall within that, if you are looking at those, would you still want to see the full criteria met on those within the group as well?

Yes. No, good question. So yes. So typically if there's a big group moving, they typically have very similar chart shape as well. And that's because they're kind of moving in tandem with each other. But again, there's always going to be your leader of the group, and then there's also going to be the laggard of the group. So the laggard might have a worse chart pattern versus the leader might be a little bit more extended. But typically in a strong move, you're going to get some sympathy move in all the names. And then, you know, then it's about utilizing your entry tactics to get into these stocks and picking what you think the leader is, the one that, you know, did it break out of a big base? Does it trade linear, et cetera? And all these, all these trades.

Is it normally the case from what you've noticed that the leader will move first and then the sort of the group and the laggards will move after? Or is it a case where they do move in tandem, just the leader will have probably a bit more volatility and then maybe an increased ATR?

Yep, absolutely. So I've seen a couple different scenarios in that sense. Typically the leader's going to move first. And then you sometimes see an instance where the leader actually gets extended and then the market's looking for a way, you know, they still like the story. So then maybe, you know, the 2nd or 3rd ranked name in the group really starts to outperform. And then another thing you sometimes tend to see, and Quantum is a good example, like when you start to see the worst name in the group with like the worst fundamentals start to move up, that sometimes means the move could be coming to an end. So it's like when we look at quantum stocks, you had IONQ, Rigetti, D-Wave, QBTS, and then QUBT was like the worst one in the group. And it was the last one to try to break out as IONQ and Rigetti were topping. And to me, like, that's a signal that the move may be getting exhaustive and might be pulling back.

No, I love that. So where do we go from here now that we have our criteria set out? And, you know, I really appreciate how you've set this out and it makes logical sense going from one to the next.

Yep.

Do you know when it does come to the group, the last question, this criteria for the ATR, would that still be the case, a 5% sort of minimum ATR you're looking for, or would, because it's the group and a lagger, is there a case where they might be slightly less, maybe like a 4% or 3%, or would the criteria stay the exact same?

Yeah, absolutely. Like the one that I'm trading, I want it at least to be above, but I'm still going to track other names in the group because one, that just gives me a feel for the market and awareness on the market. Like every day, right? I have my quote screen with all these groups that I'm watching. So like real time when the market's open, I can see where money's flowing, where money's flowing out. And although I might not be interested in buying the stock, you know, I'm just looking for changes. Is the group strengthening? Is it weakening? And that gives me information on, on on the market and helps my awareness.

I love that. So where should we go next?

Yeah, so now, so you've identified the super stock and it meets all these criteria. Now it's about how can you get into the stock? And I will talk about the different entry tactics that I like to use for this, and they're timeless. All super stocks will give all these types of entries throughout the run. It's your job to find them. And figure out how you can get in at a low-risk spot. So the setup playbook. So one thing I always like to start is I always like to say this is what I believe. I think stock over setup. And what I mean by that is this ties into the criteria because, you know, just looking for the perfect chart pattern out there, you know, they're harder to find and it just could be random versus let me make a playbook for to get into these stocks that offer multiple different entry points. And so the main ones that I like to use to get in, to get long stock exposure, is a couple different setups. Number one is the base breakout, and this is pretty simple. This can be a matter of weeks, this could be months, this could be years. And basically, right, say you have this line and then this stock is just consolidating below the line. And then boom, it takes out. Typically, it's getting a tight area underneath that line. And again, you know if you're wrong right away, right? If it comes back into the base, then the market's telling you this isn't ready. But typically, the best ones, once they break out of that base, you know, they sometimes retest it or they're just off to the races and they'll never come back. And so, you know if you're wrong semi quickly. And like I said, it fits the bill of. Big bases lead to big moves, and these can be a matter of a couple weeks, couple months to a couple years. And then number 2 is the continuation. It's the continuation flag or just side or HTF. This is a high tight flag. So you have your base breakout. So we'll just keep this. So, so you have your base breakout, the stock starts to move up. Maybe you didn't have it on your radar. But you want in and it starts to move up. Stocks don't go up forever. They move in repeatable patterns, kind of like a stair step. So this stock moved up and then it forms another mini base or a mini flag. So a high tight flag is when a stock moves 100% in a short amount, matter of weeks, and then it puts in like a flagpole, whether that be with the depth no greater than 20%. And so the stock moves up out of this base, it puts in a consolidation and boom, this is your entry coming out of that continuation. flag. And typically when you look at a life cycle of a stock, the first consolidation after a big base breakout is a buy because the move is very early. And we're talking, right, we're talking a year base. You know, we just broke out. It could run 100% in 2 months. Many people will think it's extended, but to me that just means, you know, this move is just potentially getting started and I want to get on board. So that's the continuation. And then number 3 is Just the pullback to ascending, to ascending moving averages. I'm just going to abbreviate MA for moving averages. And so, right, you have your base breakout, you have your flag, and then, and then you're looking to get in. Maybe the market gets sour or the group weakens and this stock starts to pull back. The macro trend of the stock is still up. So I'll use this. So, you know, this, this is the trend of the stock, right? And then we have our, we'll use this, which is a good longer-term trend. This is our 50 SMA, 50-day simple moving average. And then we'll also have, which the 10-week moving average, which is just, if you go on a weekly chart, the 10-week equal is the same thing as the 50-day moving average. And sometimes it can provide—

Okay.

A good entry. And so you have your stock and you're looking to get in. And like I said, maybe the market turns a little bit sour and this hasn't touched the 50-day. All stocks in their trend revisit 50-day moving average. Like I said, it eventually happens and the stock starts to pull back. And then now we're looking to get in, right? We don't want to buy falling knives, but if we see an orderly pullback, maybe an undercut reclaim of that moving average, we can buy it as it reclaims that average. With a clear stop. If it breaks back below 50-day moving average, maybe it's not ready and you're taking a small loss. And again, with the way we trade, small losses are the name of the game until you catch that outlier stock and it will pay for everything. So we're keeping risk very tight on these. And so that, that's like the pullback setup. And you can use multiple different moving averages, whether, you know, in a power trend, it could respect the 10-day moving average really well. It could respect, you know, the 21 EMA. You know, it's about what's the character of the stock. If it respects the 21 EMA really Well, then maybe you want to look to buy it off that. So, and I typically just use on my charts, I have the 5 SMA, the 10 SMA, the 21 EMA, 50 SMA, and 200 SMA. And those are what I use. And then for the weekly charts, 10, 30, and 40 weeks. So the 10-week moving average on the weekly chart is the 50-day on the daily. Mm-hmm. The 30-week is the 150-day on the daily, and then the 40-week is the 200-day. On the daily.

Futures traders, it's time to hear about Apex Trader Funding, the largest futures firm in the industry. They have completely changed the game with their new evaluations. So far, they've already paid out over $600 million to traders around the world, just like me and you. Now, not only that, Apex actually holds the record for the largest payout to traders, which is of course with JadeCap, no stranger to Chart Fanatics, with $2.5 million a single payout. And the person before that was Trader Kane with $2 million in payouts. Now, what sets Apex apart? Apex, you can get up to 20 accounts, which no other firm offers. Now, not only that, they have extremely clear rules. With their revamp, there's no MAE rule, no 5:1 risk-to-reward rule, no hidden rules, no gray areas, clearly defined drawdown models. So you have 2 options now: End-of-day drawdown and intraday trailing drawdown, which means no payout denials, no payout reviews, no discretionary decisions, and no surprises. What sets them apart as well? Traders receive 100%

of approved payout requests, up to 20 accounts, as I mentioned, and 1 day to pass. Now, the other thing that I love about Apex is not only can you get 20 accounts, but there's different account sizes. So they have $20K accounts all the way to $150K accounts. So you can get 20 of any of the account sizes that you choose. Not only that, you have various trading platforms from WealthCharts to Tradovate to Rithmic.

The choice is yours. So make sure you use the code CF to get up to 90% off on evaluations right now using the link in the description below. Trade at Apex today. Let's get back to the episode.

And so those are Those are my trend metrics that I use to assess, you know, the health of the stock and look for dips. So that is pullbacks. We might need some more room on here.

Yeah, we can. I think before we move on, so we've talked about how we can enter off this particular pattern, but with these ones in terms of the base breakout, would you just be executing once we, as soon as you break above?

Yep. So combination of different things. If the stock hasn't run a significant amount into the breakout level, because you will see that sometimes if you wait for the quote unquote clear breakout level, you know, you're buying a stock that just moved 20, 30% and it's likely gonna lead to some frustration. So ideally you get some tightness under the base and you'll see that a lot. I'll show some examples in the chart, but—

Is that where you might see a cup and handle?

Exactly. Yes, a cup and handle. And then yeah, when it, when you have tightness, you have an easy level to risk on, right? You could use last week's low or the previous day lows. But if it's not too extended to the base high, then I will buy it just as it goes through the line.

Gotcha. And then in terms of the continuation of the flag, is it a similar concept when it comes to the consolidation at the flag? So after that extension, you have the flag form and that secondary consolidation, if you will, reaccumulation. Is it just the same principle when in the flag, looking at that tightness?

Exactly. Yes, exactly. So typically you want to see a dry up in volume. You might want to see a shakeout in the flag and then, you know, it comes up to that area that it could potentially break out of, maybe puts in a tight day. And if you see confirmation with volume, then that's your sign that, okay, maybe this stock is ready to continue its trend.

So you want to see that volume start to pick up towards that tightness as well?

Absolutely. Yep. On the breakout day, typically want to see volume. And if there's a catalyst, even better. It will have volume if it's a good catalyst.

So do you have more to go over?

Yes. Yes.

Cool. Everyone screenshot, make sure you remember this.

Okay. And so the next setup that you can use to get into these episodic pivot, and, you know, a lot of people have talked about this. I think you had Pradeep on your show, which he's given so much amazing criteria on this. I'm not going to go into super into depth on, you know, what to look for, but just talking about specific setup. And again, Ideally, you have a stock that's pretty main principles, a stock with a long period in neglect, right? And that fits the theme of the big base. And then again, you have your game-changing catalyst that, you know, all of Wall Street is caught off guard. It's a huge shift. They have to update their models. The stock is seeing a huge rerating. And then again, once it gaps up, you're going to look to get in on, you know, well, a couple things, you, you know, you get into the intraday chart, you can take the 5-minute opening range break, or you can wait for the undercut. It just, you know, depends on what, you know, what fits your personality and how and how you think. But again, you're seeing a stock gap up on volume with a big catalyst, then that's the spot to potentially try and get in. And when you look at a lot of stocks that have made substantial moves, when do the moves really start? Well, they typically start on an earnings gap because that is The game-changing catalyst that no one knew about, and now it's known through their earnings report. And that first earnings gap is where your best opportunity is because it's still early versus it just had 3, 4 earnings gaps in a row. It's not that new to the market, but this is just a phenomenal way to get into a stock, and it just takes a simple scan in the morning, right? You look at what stocks are gapping up on earnings and You know, it's easy to sort through them and you see which one had a you know beat and raise quarter, and then if it's gapping up, you look to get in off the open. And typically, the best earnings gaps once they so we'll just say this is a five-minute chart, right? This is the five first five-minute candle. Typically, the ones that take out that first five-minute opening range break, and then you can say your stop is right low a day, which is right here. And typically, the best ones. There's a stampede of volume right off the open, and they typically never break low a day. And you'll see that. And it's Dan Zanger, I think, talks about this. It's, you know, the best horses don't go back to the gate. Right when you buy it, you have immediate feedback. It's the market telling you you're right. And it typically doesn't meander, come back and test your average. And so that's the episodic pivot. And then one of my favorite ones that I've really learned to like over the past 6 months, is the undercut and rally. And so this is, so we'll start with market environment. When does this setup work the best? And that is when the market has pulled back. So we'll say market, I'll just abbreviate ENV for market environment. So we'll say this. So right here is a chart of the QQQ, right? Mm-hmm. And say, started off strong. This is kind of what we were seeing a little bit now. It consolidated and it started to break down. And say it's, let's say it's taking out these, say this is January lows. So this stock takes out January lows. Okay. And then let's say I'm looking at a stock, say let's just use Sandusky for an example.

Mm-hmm.

And so this was moving with the market. And then again, the market starts to weaken up, say pulls back a little bit, pulls, but it's still holding up. It's showing relative strength. And that's always what we look for, stocks that Resist the urge to go down when the market goes down, and then when the market goes up, they outperform. It's essentially RS is looking for relative strength, finds you the leading stocks. And so right, this is let's say this is January. So we have the NASDAQ taking out January lows, but I'm watching Sandisk say it only undercut this low right here. Excuse this. So Sandisk is breaking this little shelf low. While the NASDAQ is as well. But say the market starts to bounce a little bit, you could see this Sandus, it held up better than the market. First sign of a market bounce, this reclaims this left side peak, and then it's looking to break out before the market is still— the Q's are still significantly off the highs. So, and again, you have your left side support, and you can just simply say, If it reclaims that level, that's an entry point with the stop below that pivot point, and that helps you get into a leading stock with market weakness. And then if the market does start to write itself out, you potentially have—you've invested your capital early into a stock. And so that's you know I've really enjoyed the undercut rally because your risk to reward is typically good, and then also. You know, you don't have to worry about trying to buy a breakout because if someone buys a breakout now, price might come back in and who's to say you could get stopped, whereas the structure of the chart is still intact. So using, so the main thing with the undercut rally is you want a clear left side peak. So I could, there's, there's a couple different examples, right? So you could have, you know, big base stock moved up. Pulls back. So you know this would be this was a significant level right here because this is where that stock broke out of, and it's pulling back to that level. Undercuts a little bit, right? Maybe some people have their stop losses here meanders. Maybe price tightens up in a nice little range, and then it comes back through. And typically this setup shows up when the market weakens. Indexes may be pulling. Pulling back, and you know you're looking for relative strength. You see it in what you might have identified as a super stock. And how do you get in? Well, you can use the undercut and rally setup.

Yeah. So in this, the premise of this one is very interesting. So you know it's had a rally. It leaves a particular low.

Yep.

By breaking that low, no doubt it's going to shake out people who bought at this point.

Yep.

Is going to then in probably induce and try and get people to start selling.

Yep.

Right along this, all the way down here. And then now when that actual buy takes place, you now have a lot of liquidity you can push through to then take out new highs.

Yep, absolutely. And then again, like, and then you don't have to worry about buying the breakout and getting shaken out just because that's also characteristic I've noticed is breakouts can be, depends on the market environment. And so breakouts can sometimes be tougher in certain areas of the market, but Yeah, so that's why I love the undercut rally. And I will add one more thing, and I want to add is what a setup theme. So like the the cycle of a stock and how you typically see they start, or I can write down. So if we yeah cool awesome. So and then this also you tend to see when you study like the movement the movement of a stock. They they the the setup theme kind of goes in order, right? So first you have your stock and. The first setup that you typically see before a move starts is your base breakout, your period of consolidation. So you have that. So you have your base breakout, which was the first setup in the Playbook. That was the first setup in the Playbook. So you have this here. And then the second setup of the Playbook, right, was the continuation flag, right? You have a little consolidation. You can buy it right here. And so that's the second variation of the setup in the stock's move. And then The stock continues to move and, you know, it's getting extended. Maybe we're 3 months into the market rally and it starts to pull back and you're watching this pullback, but this whole time it's contained above the 50 SMA, which again is an intermediate trend for a stock that we like to use. And William O'Neil, arguably one of the best growth investors of all time. He said, buy the first pullback to the 50-day moving average after a nice run. And so it's simple as that. You have your pullback to your ascending moving average. It holds. That offers another entry. And then, you know, the next one again, actually, so episodic pivot could occur back here as well in the base. So this, this kind of goes hand in hand with the base. And then, so you have your 50, Day moving average pullback buy. And then maybe, you know, the stock keeps stair-stepping higher, gets a little bit extended. Again, we might incur a market pullback. What does it do? It pulls back to the top of this base looking left in the chart. And this is why I always like to utilize the daily and the weekly charts because, you know, we, I want the big picture. So, and then this last one, we have Again, the undercut and rally setup. And then by this time, right, the stock could have been running for a while. You could start to get that blow-off move that we've seen quite a lot of recent, you know, MSTR, SMCI, which I'll cover in the stock aspect. But again, yeah, so understanding where the stock is in its life cycle, not only understanding the story, the narrative, the group, but then also looking at the price action and asking yourself, hmm, is there a setup theme right now? What's the general market doing? And, you know, is this later stages of its lifecycle or early stages? And having this setup playbook helps a lot to have awareness on where the stock is. And then not only that, but also gives me multiple ways to try and get into the stock.

Definitely. You can see how You know, using this playbook and this criteria, you're able to then utilize many different points along that cycle.

Absolutely.

To really maximize the growth. And even if you're not executing on each one for any reason, though, you know, very, very possible and probably optimal, it still allows you to hold confidence in and have an understanding of the stock itself and the characteristics of what it's showing you. Yeah. So I absolutely love it. Yeah. Where should we go from here?

You know, we could get into the charts.

I'm sure. Yeah, let's do it.

Awesome.

Yeah, the people at home will be wanting to as well. Anyone at home, actually, if you are interested in going deeper into episodic pivots, you know, make sure you can check out Prady's episode going into the nuances of that. But for now, we're going to jump into the charts.

Let's take a break for a minute there, guys, because a quick word from our official platform sponsor, NinjaTrader. If you've been following along on this channel, you know how much time we spend breaking down charts and market structure. And NinjaTrader is an award-winning futures trading platform built for exactly that. You get advanced charting, depth of market tools, and market replay so you can work through historical sessions and practice in a fully simulated environment, all without risking real money. Here's how to get started. If you're new to the platform, use the link in the description below to download NinjaTrader and explore it in the simulator. You get 2 full weeks for free to test everything out. And if you're already trading prop, choose NinjaTrader as your platform at checkout. It's the best platform for the job. So go check it out and let's get back to the episode.

Okay, so the first example that I want to talk about, and to me it's arguably one of the best examples, is SanDisk, and we're going to go through the criteria and the progression of this chart. So we're going all the way back to February 14th. This was a spinoff of Western Digital, and basically what that allowed SanDisk to become was the pure-play memory stock for AI. You know, memory again was a big bottleneck. We needed more memory, and basically essentially SanDisk was like the gas station Of memory, so looking at the checklist, right? We have a multi-month base, a very nice consolidation, and what's the first setup that showed up here? This was a simple flat base breakout. And what Riz said, you know, what we talked about earlier is that do you buy it again? This did move. Let's see. This moved roughly, you know, 30% to this level, but you can see this volume. And this was coming out of months of consolidation. So to me, this was looking good. This was on my radar, but I did not buy this then. And then look how linear this stock moves. If you bought this base breakout, you have a stop here at the lows, and this is giving you an almost triple-digit gain in a matter of less than a month. Then we look here, you had a pullback kind of. Again, I was watching the stock. I didn't I didn't buy this pullback. It was a little bit short to me. And then right here is when I initially got involved into the stock. And from the setup playbook, what do we have here? We have a pretty classic high tight flag. We had over a triple 100% move in a matter, you know, in about a month. And then we had a very short multi-day consolidation. You had a little undercut, kind of like a shake here. And you can see the depth of this pullback was less than 20%. So again, at this time, I would imagine many people are looking at this stock and they say, oh, it's too extended. Like, how can I buy here? But essence of a high tight flag is the stock is always going to be extended and it's just showing extreme power. So I bought this initially at $135 and we'll go back to the themes, right? So what was moving during this time? Why? Why did, why did I like SanDisk? Well, because we can go back and look at Western Digital, look at what this stock was doing. We can go back and look at Seagate. What was this stock doing? And you can see they were all rallying nicely. So that gave, that can give you conviction that, hey, maybe the SanDisk does work. And this was more of a newer merchandise. It was a spinoff. And so from that move, you get a, you know, 100% move, right? In a pretty short order. When I was in this, I was selling some into strength, and on this day right here, I sold the rest of it. Again, to me, you know, I'm trying to catch the bulk of the move, so I want to be when the trend's powerful. And to me, this was a change in character day, right? A big, big bar break to the downside. This orange line is the 21 EMA, and to me, like, I still like the stock, but I was just taking the final piece of the position off. But it didn't get off my radar because one, this was, you know, a super stock, had all the criteria. You know, the theme was hot, had big earnings, backlog was big. And so now this sets up another perfect pattern. We talked about the first pullback to the 50-day moving average in a growth stock is a buy. This red line is the 50-day moving average right here. And you can see, you could even argue this was an undercut and reclaim of this wick.

Yeah.

Plus it held above the 50-day moving average. So you have an entry there, and then you had another third. So you had, you had first pullback, you had another higher low riding the 50-day moving average, and then you retested it for the third time holding the 50-day moving average. And so to me, what was happening here was, you know, institutions were accumulating this stock, and this was the first true base that it formed really, other than that short little high tight flag. So Even after selling it here, I got re-engaged into this stock. We'll go, sorry, get a line. I got re-engaged right around here. And then this offered another entry too, is you could have bought a simple breakout, right? You had your tightening in the right side of the base. We were talking about this cup and handle. You had your cup handle here, and then you have this handle out here. And what happens, you get a very nice day breaking through your line out of this tight range, right? If you're buying this, you know, you're looking at a pretty tight stop for a stock that is a very fast stock. And so that means you could potentially put on some size in this one. And so it breaks out, puts in a rest day, pretty normal. And then even here you have your $300 psychological level. This even could have been an add point. And so at that time, Fully positioned into this stock, and then as you can see, what's what is the character of Sandis when it breaks out? It's just the best stock to be in. This this five SMA, which is to me like the ultra short-term moving average, the the strongest of the strongest stocks can just ride this thing higher. And look at if you bought this, you don't it's just this is giving you another triple-digit gain from this breakout and. You know, I trimmed along the way here, right? This day, 1/30, this was that earnings gap. It gapped up over, you know, pretty big on a massive earnings. And again, this comes to the theme that not every earnings report is equal. A lot of the story had been priced in at this time. Yeah. So this is not— and there's no neglect. The stock is vertical. It's gone from $60 to $725 in a matter of a couple months. And then so I sold quite a lot of position now, and now I just have a small trailing position actually. And this yellow line here along with, we'll take a look at the weekly, not the 10-week because it's too extended to the downside. But now, you know, we'll see. It's, we'll see if it can, you never know how high these things can go. And that's why I always like to sell last portion on weakness because again, like I said, you just really don't know. And really got that from Christian Koolmaggie is, um, he has this quote, something about if you don't trail moving averages in a hot market, you retire 10 years later. And that's just because if you're in a good environment, you never know how high these things can go. Yeah. And so this is arguably one of the best examples I can find because it seemed like not a lot of people thought this stock was very hard to get into, but When we look at the move, it had virtually every setup in the playbook at a really clean spot. And again, you can't have growth stocks go higher than you think. And so if you think it's extended, it's not extended when you when you look at the structure of the chart. And again, the beauty with this system is you know if the trend breaks, we'll be out. We're not holding this all the way down, and we're looking to capture that momentum. So that is Sandus argue arguably. the most polarizing and the best stock in the market right now. And it fit. And this is what I noticed big winning stocks that have this criteria can do. And these are the outliers that you want to look to capture.

Of course, because just a handful of these a year can make or break your career. And compounding that over years is where you see that exponential growth.

Exactly. And it comes down to the thing of undertrade, be patient, because again, One of these is going to show up again. And if you size it right and you manage the trade correctly, you only need a handful of these a year to have an awesome year. And the rest, you're just, you know, controlling your equity curve, not trying to go into drawdown.

I got to be honest with you though. I wish I had this playbook because I, from just the work I do with social media, SanDisk and memory was like a big thing.

Absolutely.

And it was just like a year, maybe even 2 years ago. And I was like, oh, maybe I should look to invest in the companies. Sandisk itself, never did it, of course.

Yeah.

Didn't even look at a chart.

Yeah.

Um, and if I had this, I would have probably been in a very long time ago and had a very good, very healthy portfolio. But it just goes to show, I never really feel FOMO because it's like a learning point. It is for me, and I would imagine there's other people out there who probably find themselves in a similar scenario. Maybe it was you years ago.

Yep.

Where you've, even if you haven't done a deep analysis, but you have the thought process of, Oh, this will probably be impactful in the future.

Yep.

This should be worth looking at or investing in. And even if you end up not doing so, and you might feel FOMO, right? Or, you know, feel like you missed out, but it's a good sign that you were able to connect some dots, even if you didn't go all the way.

Exactly.

It's a good sign because something that is very interesting with these sort of movers in particular, because even if you don't capture the whole move, Even if you only end up getting one entry, all it takes is a good handful of 100% moves to really change your career. You can really change essentially your life, you know, because even if you start with small sums, a handful of those 100% plus gainers, even multiple 100% gainers, over the space of, say, 10 years, is a dramatic increase.

Exactly.

And I think a lot of people don't realize that, you know, that this opportunity, especially in comparison to, say, shorter-term trading, I don't wanna say easier, that's the wrong word, but like this is a methodology that anyone— Exactly. You don't need to be a professional fund manager or anything like anyone, and anyone can do this. And if anything, a lot, it's a lot simpler in nature and calmer in nature than, you know, intraday scalping or day trading.

Yep.

But it still requires that discipline.

Exactly.

To follow the criteria you've set out. And it still requires that discipline to execute when the time's right.

Yep.

And manage your trades properly.

Exactly.

I've got to tell you something.

Hundreds of thousands of traders have already made the switch to TradeZella. And the biggest reason? The AI. TradeZella is the all-in-one platform built to turn you into a profitable trader. And at the center of it is an AI copilot that does the heavy lifting for you. It watches every session. It learns exactly how you trade and your strengths and your weaknesses, the patterns you keep repeating without even knowing it, and it tells you in plain language what's working and what needs to change. The moment you close a trade, your AI captures it automatically. Fully synced to your broker or prop firm, zero manual entry, you can replay any trade tick by tick, pip by pip to see the full picture. Backtest your strategy on years of real data before you ever put up real money behind it. Your AI copilot ties all of it together, surfacing insights you'd never find on your own and guiding every decision you make going forward. Hundreds of thousands of traders, one AI-powered platform, real lasting results. Now, if you want that AI copilot and see your trading excel, the link for TradeZella is in the description below. Use the code CF20 for 20% off your yearly subscription or CF10 for 10% 10% off your monthly subscription. Let's get back to the episode.

Yeah, no. And again, yeah, you can— someone can have full-time. They don't do this for a living. This framework is you could use it, right? And you, if you have time in the evenings, you can do it, find your stocks, have your levels that you'd buy. And so, yeah, it's— and again, and with this, with this style is there is really no limit right there. This is, you know, the bigger that your portfolio grows or the more money that you're managing, You know, hold time is important, right? You have to accumulate stocks and you kind of need to have a bit of an understanding of the, you know, the story and what you're looking for and having different entry tactics like buying pullbacks and whatnot. And then to your point about, right, sure, you could have just bought it at $60 and held the whole way. That's great. But like we showed, look how many amazing gains. I knew, I knew like one person that bought it here But again, right, look at how many times this offered opportunities to get into the stock and offered great, great returns, multiple 100% moves. And, you know, we're looking to compound our capital. So, you know, you do that, you have, and then compound it again in another stock, and that's how you really get that super performance.

That's right.

So, and so we'll, we're gonna dive into some more examples. Let's do Rocket Lab. And Rocket Lab's a good example of One that, you know, I saw quite early, but I wasn't involved. And again, it just fits the theme that if you think you missed it, sometimes you really haven't. So zooming all the way back, right, we're looking at the Rocket Lab chart. We have a massive multi-year base, right? Like this, this stock has been dead since, you know, topped in 2021 with a lot of growth stocks. But just this whole period of basing, it's just going through the proper supply and demand characteristics. And then we need a spark. We need something to, you know, get this out of the base. And what's that going to be? And so all the way back here, you got your initial kind of, you know, base breakout. And this one again, you know, fouled here, came back in. But this is when it was showing— it started to show some linearity right off the bottom. We had a 70% move. We had a normal pullback. We had another 20% move and then we had some tightness in the chart.

Yeah.

And we can see the alignment of the moving averages. This is another thing that you need to look at for when trying to figure out when the stock potentially might be ready. You can see the moving averages were all tangled in here. And then you, we got that full positive alignment, 50-day above the 200-day. And so the trend is now starting to change. And so

this volume as well, that uptick in volume in comparison to the rest of the base.

Absolutely. And that's another thing is, right, it's, you know, had some volume here, but again, this was, I believe at the time, yeah, this looks like it was highest volume ever. And that's another thing you can run easily. You can just run a daily scan, spit me out stocks that have highest volume ever because something potentially is going on there.

Even at this stage, if we just zoom out again quickly, sorry. Just here, if I just show you here, would this still be a criteria? I know it was something that we, when writing out the examples, kind of a bit later on in terms of a setup. But see how we sweep this high?

Yep.

And then probably get some buys in, and then we end up coming undercutting here.

Yep.

The low, the current low of the base. Yep. And that's actually then the low of the overall base itself.

Yep.

Would that then be the undercurrent rally still? Is it like a— even if you might not execute from there because you're still in the base at that point, would that be like sort of a, oh, this could be the start of something? And then you start, as you said, the EMAs, the volume start to tighten around the top of the range, if you will.

Yep. No, yeah, that can absolutely be an entry, but primarily, For the undercut rally that I trade, I'm looking for a more established uptrend at that point. But again, this, it's the same concept. And at the end of the day, we're just trying to get positioned in a stock with low risk. Yeah. And what does this give you? Low risk. Because say this is really important level. If it breaks it, then it's probably going lower. But what if it sweeps it like you said and reclaims? Then maybe there's some trapped shorts there and then that's kind of what starts the move. And so going on in this chart is, right, we have the stock is showing a lot of linearity. I wasn't involved, but it moves out of this flag, right? We talked about those flags, see the volume drying up and look at the uptick in volume and then it continues. And again, this offers really, this offers a really nice move, triple-digit gains, never breaking the 21 EMA. So again, a simple Sell some into strength and then just trail with the moving average that the chart respects. And that, and it's really simple, yet not many people can, can follow it because the stock starts to get extended and you think you're smarter than the moving average. Mm-hmm. And when in reality, that's why you pay yourself as it moves up. You, you finance your risk. And then again, like I said, we don't know how high any stock can go. And if you're arbitrarily Just, I know I always trail some, but some people like to think they just sell everything at the top. It's, you're basically trying to say that like, you know what the market's going to do versus letting it move. So this gives you an opportunity. And if I was in right now, it's starting to get choppy. And when it broke the 50-day moving average, this, I would have been out as well. Maybe I would have given it more room, but at this time I would have exited the stock if I was in it. And then again, it kind of just moving sideways. There was no like big catalyst at the time, but again, this had a big base. So we're just going through the life cycle of the stock. And then this was also the tariff tantrum as well. So everything pulled back, especially high beta. But I will go back into a recent example of Rocket Lab from this year, and it had a couple of things. So One, remember I talked about that undercut and reclaim of a left side peak. So we're watching the stock. It has a lot of the criteria. It's had a big base. It trades linear when it breaks out. It's liquid. It moves fast, right? Even today averages ten percent a day.

Wow.

And so right here is when I bought, and there was a key reason why I bought here right on this day. It was. The Trump signed the space executive order. So that is a massive catalyst, like Trump signing it. We want to be a leader in space. We're going to be investing into these companies. And then there was also another thing, and that was Elon Musk was floating the idea of taking IPOing SpaceX at an absurd valuation. And so what do people think? They're like, well, if that's going to happen, I need some space exposure and this executive order signed. So 2, like Big catalyst. And this had a perfect setup, had a big move up, pulled back to the moving average. You can see like how important that this level was right here. You know, it rejected here, it rejected here. This was a breakout right here. And then where is it finding support? So this is like an undercut and reclaim setup.

Yeah.

You have 2 tight candles on little volume, and I bought this right here and volume started to tick back up. And so you see typically best trades work right from the start, right? And so you get that. And so now this fits all the criteria and it starts moving out right from this area. We're looking at, you know, a, you know, 60%, 70%, 50% plus move off this level with a very tight stop. And then again, I— the market was a little bit more shaky. But again, looking back on this, This could have been an entry right here, right? You— this is kind of like your little cup and handle base. Big move up, pullbacks that left side high, found support at the rising 21 EMA, and then shot back up. And again, it still gave a good move, right? A 30% move in a couple days is a good trade. Not everything's going to turn into a monster, and that's why we sell some into strength. And then now sold some in strength on the way up, and actually yesterday I sold it. It's breaking, breaking the 21 EMA. Now it's falling through to the downside today, and I was watch. I was backstopping some of the position with this 74 level, and there was more confluence. Is this white line right here? 74 was the 10-week moving average. So to me, the stock just needed a little bit more time. But looking forward, this could provide another entry. The markets. Got the market environment's gotten worse, so these high beta names can be less likely to work. But you know what would be another potential entry is if this put in a little base, reclaim 74, you have another undercut and reclaim. So yeah, these stocks provide tons of opportunities along the way, and you don't have to be in the stock the whole time to catch it. There's plenty of trade opportunities throughout the move. And so that is Rocket Lab. And what had— what did we have extra conviction on that supported the space theme? Planet Labs, another one that we traded. And all these trades that I'm talking about, these were ones that we traded in TurboTax and bought for clients. So I wanted to give some real-life examples because I could see some people saying it's hindsight when you see that, but it's not. You can see this stuff real time, then you utilize The setups to get into this stock. So Planet Lab, as I'm sure people are aware now, what do we see here? We have just a massive base, massive consolidation. So we'll go to the weekly and we'll put the weekly. So this is the 10-week and 30. So we have a massive base. Could this be bottoming? This is bottoming out, but I'm not going to be interested because look at the slope of the weekly moving averages. You have, they're all out of whack, the 10-weeks below the 30 and the 40-weeks. And again, like we said, it's going through the supply and demand characteristics, and then boom, out of nowhere, we have highest volume ever on in December. The 10-week got back above the 30 and 40-week, so automatically this stock is worth watching on radar. And we will get into the, and we'll narrow it down to the daily chart, and we'll talk about what this was. And this was an earnings gap. This was an episodic pivot. And what this was was This was highest volume ever on an earnings release, and that's big, right? Coming out of a long period of neglect, they had— they recorded free cash flow for the first time ever. They had huge backlog, and just like the satellite space theme was growing in interest. And then, so could have bought this earnings gap potentially. I wasn't involved with the stock, but again, we can just go through this, right? Could have bought this earnings gap. Maybe you get stopped out, but this undercut gap days Lows. And another, I'll mention another key setup that is the same thing as, as the UNR. I actually watched Ariel's Chart Fanatic episode and it was awesome and he talked about this, but this is the high volume close reclaim. So

yeah,

6.5, the close was 5.96. And again, that's an easy level to risk off. So if you don't want to buy the earnings gap, this is again a variation of the undercut reclaim setup. But it's reclaiming that high volume close because that's a pivotal spot in the charts, a key pivot point. And so that's notable. So fast forward, had an earnings gap, has another earnings gap, had free cash flow again, had a record backlog. I believe this was a double beat and raise. Look how linear this moves. If you even on this day, it was up 35%. And again, What are most people going to think? I don't want to touch it. It's too extended. But we're looking at the structure of the stock and where it's at in its lifecycle. And to me, it's not that extended, although people are scared to buy strength, right? Everyone says buy low, sell high. How about buy high, sell higher? That's kind of my philosophy. And what did this do? This gave an amazing, amazing trend. Wasn't involved with this. And again, some people would say, Oh, Connor, the stock's gone from 2 to 18 and you haven't even been involved like this. The move's probably done. Not necessarily. And then we have another earnings gap on huge volume, double beat and raise. And this is in TurboTax. We bought this earnings gap, right? Bought the 5-minute opening range with the stop at low of day.

And following that, one of the examples. Yep.

Literally as simple as it gets, right? And it's not, you know, real time. And it's obviously not the easiest thing in the world, but it's like Planet Labs. Well, I'll just give you waking up in the morning. Planet Labs is gapping up on earnings. I see space stocks are strong. This is clearing a key left side high, had a period of neglect right into the earnings. You buy the 5-minute opening range break, stop at low of day. This gives no pressure, pulls back here again, but again, sticking with the stop. Not not breaking the rules, and what do you get? You get another super linear because I saw this earnings gap back here, and I saw that I missed it. So I said, if this gaps up again based on previous chart history, it shows it can trend linear, and it had a double beaten raise. So I said, why wouldn't I try this? At worst, I lose you know five six percent, you know less than one percent of the AUM versus what can I get? Multiple multiple multiples on my risk, and this moves up 70%. And like I've shown in recent examples, we're selling into strength. And then again, the market's been weakening. This breaks this little shelf here. The character of the stock is changing a little bit. It's making lower highs, lower highs. Look at the slope of the moving average starting to roll over. So the stock's not like. I mean, this could be a long-term secular top. I have no idea. I don't really think so. I just think the market's showing me the price action that this might be going into a basing period or a longer consolidation, and we're looking to compound our capital. So again, I got knocked out of the last trailing piece.

Yeah.

And then again, I'll watch this for another variation of the setup.

In terms of selling into strength, is there any criteria that you follow to do so, or is there a criteria Generally is good practice.

Yep, absolutely. So if you look at stocks, typically the first 3 to 5 days, again, this is a principle that I learned from Pradeep Koulmaggi. And again, this whole Super Stock criteria, this is like on the heels of the greats above me. I'm not reinventing the wheel. I just added a little flair of myself and just tried to make it my own, what fits with my personality. But Qual McGee and Pradeep did the same thing. They studied all these different stocks and they found that in the first 3 to 5 days, that's typically your high momentum run. So after that, it could slow down. So you can finance your risk in the first, you know, 3 to 5 days and it varies. So sometimes if a stock's more extended in its lifecycle, I'll look to sell some in strength right away if I'm catching it out of a big base or in earnings. Sometimes I will just say I'm going to sell half on the first daily close below the 10 SMA. And it, it just takes like what I'm looking at. But again, if you're a beginner and I was going to give you advice, I would say you're going to buy these setups. You would just say trail on the first close below the 10-day simple moving average. And you'd be surprised at how many people couldn't follow this because they let their opinions get in front of the market. And that brings me to another example of like the turtle traders. He was a systematic trend follower and he got people from all different walks of life. People that did well was, you know, the garbage man, not the surgeon, because they thought they were smarter than the market.

Yeah, that makes sense.

And then another way is ATR extended from the 50-day moving average. Once the stock reaches 10 ATR above the 50-day moving average, that is extreme extension. It can continue going higher, But there's a more likely chance that it starts to pull back, and that's another good thing to use. And then after selling some into strength, I'm going to sell the rest on weakness, whether that be a break of a support, a moving average that I'm trailing with, and whatnot.

When it comes to this philosophy, if you will, of observing stocks in the cycle, 2 questions. One first is, What are the key things that when you first started to learn and identify and try and apply these, this viewpoint, what was something you wish you knew back then that would've helped you maybe overcome some hurdles or have a better understanding or better action to take? Yeah. You now understand.

Yeah. So when I first started, I had no market awareness. So I thought it does, regardless of what like the general health of the market is, These setups aren't going to work in a weak tape. You know what I mean? If the indexes are in a downtrend, there's not many leaders to trade. Like, yeah, they could set up, but they're not really going to work. They're going to have a much lower win rate. So to me, it's just developing like a market awareness model. And as I've developed over the years, it's gotten a little bit more complex. But again, like if I had to say, if I had to tell someone what's a simple market monitor that you can use, It would simply be, is the Q's above a rising, you know, 21 EMA or 50-day? These are going to be your best opportunities to make money. And again, and then we look here, this has just been in a big base. And again, there's been pockets of strength, like I covered memory space stocks and some other things. But on balance, there's been a lot of weakness and that Largely is due to the fact like we're just in a big range and moving averages aren't as relevant in here. But again, Simba say the market's in big range; it's not conducive.

I think undercut rally.

Yes, exactly. And that would be the way to get in, right?

That's our prediction.

You have exactly and undercut

interesting

undercut rally. I'm not going to dive into this, but it's same thing as failed breakout, right? What did this give you here? An undercut rally. This is just inverse. cues. So did that answer the question?

Yeah, yeah, no, it did. And there's the second part of the question was more so when now applying this, like now, what are the main hurdles that come to mind when trying to be effective in its execution? Is there anything that kind of is something that you have to— is not a constant, maybe a problem, but more so a constant thing that you really have to be sort of aware of or manage? In terms of trying to execute this on a regular basis?

Yeah. So one is being, executing this on a regular basis is being selective. And this isn't like directly answering your question, but it kind of comes in as, and being selective in the sense of you only want to trade the best merchandise. And really the hardest part I would say of executing this is sometimes A stock can look extended, like I said.

Yeah,

it really can look extended. And what have people been saying for a while? Like, right, we look at the long-term chart, like the market's been up for quite some time. But again, always understand when I'm taking the— I always understand when I'm taking these setups before I buy the stock, I know what I'm willing to risk. So even if I'm not, sometimes I'm not feeling confident about it and I might hesitate, but I just need to be like, this is matching all my Criteria, I'm going to try it, and if it's smaller, that's fine. And I know what I'm willing to lose if it doesn't work. Not I'm not going in thinking, oh, I think Sandus is going to go to seven hundred dollars. I I never thought that. And and when I bought it at one thirty five, I can't tell you I I had how many people are like, you're buying Sandus up here? Like yeah, I was, and now it doesn't look. That didn't look like it was extended.

But to kind of— you have to go against maybe how you feel and generally, especially, and it's usually the case, what the sentiment or what other people's opinions or perceptions are.

Exactly. No, that's— you described it really well because I can vividly remember I was like, I was, you know, talking to the team and some traders that I talked to and I'm like, Sam, this is a perfect high tight flag. They're like, it's insanely extended. And I was like, It is, but you know, so yeah, not hesitating and trusting the work that I've done, and that when I think I found potential winner, take it. And if if the market's shaky, then you size down or you don't take it. You know, using that awareness. I have a couple that I really like. So Bloom Energy is one of my favorite. What?

Sorry, I was I was in I'm invested in Bloom.

Oh nice, awesome. So.

Whenever I see anyone, you're the second person on Chart Fanatics who's mentioned it. So it makes me feel, yeah, I don't know, actually, maybe if that's a sign to get out now.

Yeah,

I'm messing around.

I don't own it anymore. So you're good there.

I don't know if that's good or bad. I should be following the expert, you know?

So this is like one of my favorite examples because we have a 7-year base. What was the big theme of the market around when this The bottleneck for energy for data centers. So what stocks are— what can we use? What stocks can we trade that captures that theme? Bloom Energy stands out initially. And again, this isn't hitting my scans in this space at this time, but we're looking at this. When I see it, I look at this space and say, okay, this stock's been doing nothing for 7 years. If it breaks out on a catalyst, it has the opportunity to really move. And so at this time it also had 30% short interest again, which to me just adds conviction to the narrative. I remember, I mean, a 7-year breakout with 30% short interest. Like who—

What does that mean? 30% short interest?

So it just means percentage of the float that's short. So 30% of the float was short. And to me, that just— people that were short seemed way off sides. And if the stock started to move, they're going to have to get out. So again, People might ask, well, Connor, in the space, this isn't hitting my scans. You're right until this day right here. And why did this hit my scans? Because this was a catalyst on highest volume ever. And this was a Gigawatt fuel agreement with American Electric Power. And what did this do? This traded up, what was it? 60% on 500% above average volume. And again, People are like, 60% in a day is a crazy move, right? And the character of the stock was still super choppy and it was still inside the base. So I saw this catalyst and when I see these and if I don't think they're ready, I just tuck them away in what I call my universe watch list. So that I'll monitor throughout the day on the weekends and check in like, how are these stocks developing? So this, it's on my radar, it's on my universe watch list. And then again, it has another gap up. on almost highest volume ever. Now this time it's breaking out, it's gapping out of a base on volume, on a catalyst. And this catalyst was, they, it was a partnership with Oracle to power data centers. And again, this was up 22% on 5, on, you know, 300%, 400% above average volume. So to me, this isn't your Aunt Sally buying Bloom Energy. This is a change in character because Wall Street has to re-rate the stock. It had a legitimate catalyst and the volume's there to confirm.

Yep.

And I didn't buy it. I didn't buy it on this gap either. For whatever reason, I think this was the perfect entry to get into this stock. And then so at this point, I need to get into Bloom Energy. I want to find a way.

Yeah.

And so it continues to trend higher. And at this point, it's showing linearity. And then right here, August 22nd, I took this short flag break. You can see it had a big move up linear, and then it undercut this kind of this gap in this 10-day moving average. And then I bought this breakout at around $45, right over prior day's highs. So we're talking like 4% risk in a stock that is a very fast-moving stock. And so then it continued to trend quite nicely. It rode the 10-day moving average very nicely. And I sold a lot on this gap down below the 10-day moving average. And I don't remember exactly, but sometime in this area, I believe here, I was all out of the position. But, and then again, I never got back involved. I know people, but it did show some setups. But to me at this point, it was trading too erratic. Mm-hmm. And this was just too, Of course, in hindsight, we can say this was kind of a base breakout. This was also, right, you kind of had kind of an undercut and reclaim in this setup, although it didn't undercut it, but it kind of held this low, which was a pretty pivotal spot, right? Had volume.

What about to the left there?

Right here?

Yeah.

Yeah. This is also another one. And that was probably the best entry because, right, we were looking left on the chart. This was kind of a breakout. It held this spot, held this spot. And then, yeah, right here was a pretty good spot. What I talked about in the undercurrent rally, look at how tight these 2 candles got on low volume. And this was during the holiday period. So that's also a reason why. So it's kind of tougher to say, but this came back through and yeah, and it gave you a nice run depending on what your, on what your system was, rules, you know, you should be a winning trade regardless. And now it's pulling back to the 21 and, you know, this could set up. You know, potential undercut and reclaim or pullback to ascending moving average. But it'd

be interesting.

And they have earnings coming up also. So that's Bloom Energy. I just want to cover a couple more big themes. Do we have time?

Of course. Yeah.

Awesome. So what I've showed so far is like more so of like the fundamental stocks that had fundamentals. But what I want to talk about now is the thematic, the big thematic runs. So in a hot market, You, every hot market cycle, you have a group of stocks that I call like, it's a science fiction theme, right? Quantum computing is like 10 years away to say the least. But why are people buying these stocks? Because they're buying based on the potential of quantum computing stocks moving forward. And hype alone can drive stocks like so high. And Again, like, the thing why I changed, because, you know, the strict CANSLIM criteria, you can never touch a Quantum because it has no quarterly earnings, no annual earnings growth, they lose money. And again, these were like the worst of the worst stocks, and the whole way everyone wanted to short them. But look at how many amazing opportunities that these gave. And I'm just going to focus on this opportunity, but The same thing happened. You know, you had so many. You had a huge consolidation, and just look at the great opportunity trading opportunities that you had. You know, you had multiple entries. This was a perfect flag break.

Yeah.

Big. It's just you know what really where I got this was from Qual Maggie, and he talks about it's so simple. You have a big move up. You have a pullback. You have an undercut. You build a higher low. You get tight, and you have an. Expansion breakout that day. Simple enough. And so, and again, primarily I'm looking to position trade, but these shorter-term swing trades can be great for compounding. And you can buy stock, right? You get 30, 40% in 5 days. You're selling most of it and leaving a little for what could happen. But what I want to narrow down is this setup right here, because to me, I actually didn't catch it, but these were like some of the perfect setups I've seen. So one, it fits all the criteria, and at the same time, you know how I mentioned like chart theme?

Yeah.

So this was this was September 12th. So let's look at what the other quantums were doing at this time. 9/12. Doesn't this look like the exact same chart as I mentioned to you? What about QBTS? Doesn't this look awfully similar at September 12th? And then that what I mentioned earlier is the leader laggard. QUBT was the laggard because right this was 9/12. This never made a new high, and obviously when it tried to break out, that's failed breakout. But we're going to focus on IONQ. And again, you have a strong group. You're in a very strong momentum. Markets. September of last year was extremely hot for themes. Like, they were running left and right. And, and although these had no fundamentals, you just had like the most perfect year-long base. You had an easy line and you had tightness on the right side of the base kind of forming that handle. And then again, look at the breakout confirming with volume and you get a very strong multi-day push, never breaking the 5 SMA. And then another, and then at the same time, there was another big story thematic group running at the same time, and that was Oklo. And again, this one is similar to Quantum. It has no fundamentals. It makes no money. Their product is 10 years away. But what was the big macro theme of the market? It was energy for AI. People are going to— this was the high beta high flyer of that. It was basically the momentum trade. You had your leaders that were like GEV and BE. This was your high beta name, which can give great swing trades. And again, it almost virtually had the same setup as the quantum names, kind of same. It had a big multi-month base and you can see how it tightens up on these moving averages on the right side. And the day before it really started, that was like one of the tightest candles of the run. And you can see it gave a really nice move. So those are examples of You know, more so thematic story stocks and whatnot. And that just because they don't have earnings or sales growth, right? And they're not making money, the duration of the moves aren't going to be as long, but the velocity and speed in which they do them can be really fast. Like these aren't going to trend for 8 beat and raise quarters most likely, but you can get kind of like performance booster swing trades in these periods. So that was Quantum. There's a couple other— another big one, because by this time I assume all the viewers understand the criteria. So I'll be a little bit quicker on this. MP was another one, right? This day right here, 7/10, you had Department of Defense announced a multibillion-dollar— what was it— partnership to accelerate US production of rare earth magnets. And this was highest volume ever out of a long, long period of consolidation. And this one was one that was pretty much a scratch trade for me. I, you can see the setups I tried and I wanna show this because not everyone works, not everything works. And, and like I said, like our win rate is fluctuating between, you know, 30 and 30 and 50, maybe 50% in a super hot market. And, you know, you had your gap up. Your EP per se. I remember I tried this out of this flag break consolidation. You had your 2 tight days and it started to submerge out. Very weak run, came back in. I remember I sold the rest for breakeven around here and then it offered me another setup that, because I still liked the stock, I liked the characteristics. Maybe my timing was just wrong. And that's another thing is never be afraid to try to buy something back. You might feel like stupid, like I bought something at 100, I sold it at 95, and then I bought it at 110. But that's fine. You know, maybe you're just early and it needed to chop down. And then so this, this was the pullback to the first touch 50-day moving average, and it built an extremely tight range right here. Right? To me, this is like institutions accumulating, and then you got this big move up, and I trimmed some and ended up being you know a scratch trade as it. Broke back below this kind of pivot level. And then at this time, so this was per se your liquid leader, and then simultaneously you had USAR, which was like the high beta name. And this was breaking out of a huge base on volume and a strong theme. And this gave you a pretty crazy, you know, triple-digit gain in a matter of a couple days. And there were some other names moving with it. CRML, huge move. UAMY, huge move. And TMC was another one just off the top of my head. So like all this group was moving in tandem and then once they started to top out, kind of the theme for these rare earth stocks kind of died down.

What's the reality of like when the markets are hot and we're seeing volatility and there's ample opportunities, like how do you then start to filter which ones you are willing to take and which ones, even if they still fit the criteria, look like a great setup and opportunity and have a good reward-to-risk ratio to it as well? How do you kind of dictate which ones to take then, right, in those moments?

So that's a really good question because I've had times where the market's super hot and I'm overwhelmed in terms of like, it's so hard to keep track with all these high movers and in a strong momentum cycle. This all— what also this framework gave me is anyone can kind of throw a dart and make money, right? But in a hot market, if you want outperformance, you need to be in the best movers. And so that's obviously what prompted me to have this criteria. But so say I'm going into a trading day and I have Bloom Energy, SanDisk, um, RGTI, IONQ all setting up, and I And I have cash, or say I have 20% cash, if Bloom, and they all fit my criteria, if Bloom Energy kind of like triggers first, the capital is going to go there. If, and then if GEV triggers, the capital is going to go there. And then so kind of like what looks ready to go immediately. But again, like anything, I'm going to miss a lot of stocks all the time. I'm just trying to put myself in a position to have the odds stacked in my favor and be in the right one. But yeah, that's definitely a challenge in itself. And it's just kind of how the market cycle works. You have that challenge and then when the market sucks, you can't even find the stock, not even think about buying.

How do you keep track as well in terms of, I know you mentioned about some, you might look at the weekend and keep tracking the, did you say it was the universe sort of stock list, if you will, or watch list?

So

Yeah. So how do you look to, one, identify? I know you mentioned the scanner earlier, and then 2, keep track. You know, once something is on your radar, what does that process look like for you?

Great question. So to me, the weekends are very important. The market's closed. I have a clear mind. I can just really sit down. It's quiet. I'm not worrying about the market and I can look at stocks. And so I have, I'll use Market Surge for my screening and It's pretty simple. So I, I have a bunch of different scans, like, you know, price performance, some earnings sales growth. I look at the top industry groups and I group all these stocks into a big watch list, and then I go through all of them. And then so when I'm going through these stocks, I sort them by industry group. So I do it in alphabetical order. So every weekend, like the aerospace and defense group is first, and I have like a 2-panel. I have my charts that I'm looking at, and then I have on another screen, like just a Word document, and I have these groups and I say, okay, there's KAI, KAI, FTI. I'm just rambling like different aerospace and I put them on a list. And so I'm like, okay, I'm seeing like 8 to 9 aerospace and defense stocks with similar chart patterns showing relative strength. I need to watch this going forward. And so I go through the whole watchlist and I make what I call like my thematic watchlist. And I typically like to tweet it every Sunday. People like it quite a lot. It takes me some time. And then in that list, I will go through them and kind of see what I think's actionable and ready. And then during the week, watching the markets all day, so I'm reading the news, I'm pretty in tune. I do this for a living, right? We're managing portfolios, so I can read a lot. I can stay with it more than some other people that say they're working a job. And then I keep a monitor with all these groups and it's like I can just like during the trading day, I can just see like where's money going in, where's money coming out? And it gives me a feel for the market and like what I would say, like what sectors are leading the market. And then, you know, through those lists, I then have my universe watchlist that I think names that could be actionable coming up. And then every night before the market open, I have my actionable focus list. I try to always premeditated trades only. And that's just due to the fact that you're virtually sitting in front of the casino all day. So if you have this alert going off, this alert, no plan, you're just going to buy it randomly with no plan. And night before I have my plan and I obviously there's some, and then like the earnings catalyst setups I'm watching, I'm scanning in the morning because those are happening in the morning or after hours. And then I'm just trying to only take premeditated trade setups. And yeah, that's kind of my process. And like I said, and then every night I go through all these lists, I go through my universe watchlist, I'll run a couple like up on volume scanners to see like if something catches my eye. And then it's about making my focus list and, you know, having a plan for the next day. Yeah. So the next ones I want to talk about is how you can apply this to, um, it doesn't have to just be stock, right? This setup occurs in commodities, everything. And it's just, there's not necessarily earnings growth, but there's a catalyst. And to me, gold and silver, again, they hit every criteria. So we zoom out to the monthly, and I'm going to make this a log scale real quick so it See, so zooms out. So this is like one of the, like, the most obvious. This was an extremely obvious pattern. This was a decade-long cup and handle base.

Yeah, I remember that.

And like, I remember, I remember what the sentiment was for when this broke out. And it was people are saying this is too obvious. Everyone from here to Hong Kong saw a decade-long Cup and handle base, but and again this gold moves quite linear out of long-term patterns and just kind of the character of this stock literally dead money for over a decade until it wasn't and how and then this was your clean breakout here out of this ten-year cup and handle weekly monthly base and I'm going to take log scale off and so this provided so many different entries along the along the way. And basically what the big driver was for commodities, and it was really like the debasement trade. People, the dollar was falling off a cliff. People needed somewhere to, they needed a store of value for their money and gold made a lot of sense. And so you have that as a pretty big catalyst. And again, the AI race, This administration is all in or nothing to win, and really the debt is just going parabolic. So they're like, "I need, I need some, I need a hedge per se because the dollar." And so that, that was really your catalyst. In 2020, about early 2024, was when this move really started. And again, the narrative wasn't as strong, but you just had a really clean base breakout, like simple, good above this line, bad below. And it never revisits this breakout level the whole time. And so it keeps, you know, gives a huge trend again, right? This is a huge move for gold. And obviously you can trade GLD, the ETF, but in terms of like ATR and liquidity, gold, there's so many products you can trade, right? You can trade futures, which is huge leverage. You can trade options. And then you have like levered miners, like tons and tons of different mining stocks. That made huge moves as well. But for this, we're just going to go over the ETF. And this was another perfect multi-month base. Look how tight it got. Look at the moving averages, extremely coiled, bounced off the 50-day moving average. And then, you know, again, it looked extended here, but, you know, continued to go higher. And I had a couple trades. I owned gold a couple times back here, but really, I got involved again on this base breakout, and again, it's two years into the move, but it set up a pretty nice pattern. And this is when we finally started to go parabolic. I think it was like 12 ATR above the 50-day moving average. Sold some on the way, and I sold the rest on this break. And no idea where gold goes now, but sentiment indicators were flashing. And then also, like gold is trading like almost like a meme stock right now. This is unprecedented volatility right now, and.

Do you think it's in line though with, like, as you say, the sentiment globally that we seem to be in a very interesting position? Like the US seems really strong at some points.

Yep.

And then sometimes it feels extremely weak and that seems to be quite an interesting flow we keep seeing.

Exactly.

Over recent, well, say recent years, maybe the last 12 to 24 months, this peaks and trough, it's obviously leading to something. Either, you know, more strength to the dollar eventually, or whether something transitions. Yeah, obviously that would be a dramatic trend, the Ray Dalio transition.

Yeah, right. Changing world order, right?

Well, it seems like it, right? So like gold and silver's moves. Yeah, it's kind of reflected sentiment out there.

Yep.

And then you see obviously countries and their gold stockpiles. Yeah. You know, in particular, like China and Russia, for example. Yep. Accumulated so much. And then I think restricted exports around the time when they started going parabolic as well. So there's all these factors. And bear with me, I'm far from like a macro or a fundamental sort of base trader.

Right.

But if I know that, that means that the people who do know, probably you and the likes who are more in the trenches and really ingrained into, you know, the research and the understanding.

Yep.

You guys probably know a lot more deeper levels and layers. To the conversation.

Yeah. And that brings me to something I want to also touch on is, you know, I'm talking about like the fundamental, the story and stuff that I'm looking for now with AI. This is like, you know, you can do it very quick and it's not like for— I'm not reading through 10-Ks. I'm not, you know, making up my own model. It's really just about, you know, having a general thing like what you're just saying about gold. It didn't take a genius to put together that. And when you couple that with the chart, You kind of have some conviction and you have some edge to make the trade. And then silver, same thing, right? You had a massive, massive base during this time and started to break out. The gold-to-silver ratio was at a record. It was at a point where typically silver tends to start to outperform. So you just had an enormous base. I'm seeing gold breaking out. It's logical to think that silver might join the party. And I, in TurboTax, I bought silver right around here. Same setup again. I didn't have it back here, but to me, I wouldn't really, I wouldn't have held through. It was very choppy, right? I want the linear, linear runs

of the move. Yeah.

Yep. And so what do we get here? Big move up. We're getting super compressed. Price is getting coiled. You know, your volume's drying up. Simple breakout through this line. And for, for silver, I mean, this is a huge, huge move. And then again, continue. Or, and then again, it, it puts in another perfect base. And this is also like a VCP base, which is just some characteristics that you'll find in the base. So we look at this first pullback, it's about, you know, 15%. We, we look at this Second pullback, it's about 6%. And then on the right final contraction of the right side of the base, range is getting tightening. And to me, that's like supply and demand. You know, there potentially be a lot of demand for the stock if it breaks out. It gave you another perfect base breakout. Again, insane move for silver. And was selling across the way. And on this day, I sold the rest of the silver. Because same thing with gold, unprecedented volatility, had already a massive trend. You know, how much meat are we looking to take off the bone at this point in the move? And yeah, definitely a polarizing, a crazy, you know, a crazy move in the markets. I know a lot of people that were really trying to short these for a while. And, you know, the trend, yeah, it was, I don't think anyone had on their bingo card Gold and silver doing this. And then another thing that you kind of just said in terms of group, right? We have copper breaking out of a massive base. We have palladium. Look at this run on palladium. Or sorry, that was platinum, palladium. And then, you know, we can end on what's going now, XLE, which is energy out of a decade-long base. And is this going to play catch up to some of the other commodities? We shall see.

Reach out. Conor, it's been an absolute pleasure. And what a step-by-step process, you know, really indicating how we should be thinking and following the markets, you know, on a— even though it's a position and swing trading, it really is open to all. Even if you're not like a, well, one, a professional money manager.

Yep.

Whether you're, you know, trading large capital or not, whether you day trade, this is actually something that will help you alongside that.

Yeah.

To really increase your wealth and increase your understanding on the sort of macro and stock side of things. Because I think anyone who is day trading, you know, futures, forex, whatever it may be, you should be understanding this. 'Cause this is as simple in the sense that, you know, in a lot of these, you know, futures traders out there have got such complex intraday systems. And well, this is literal chart patterns and breakouts.

Yep.

And volume. And a lot of the time you'll have, just from being a trader, a good understanding of themes, a good understanding of the temperature of the market.

Yep.

So this is how you can, even on the side as a trader, really elevate your overall net worth over a compounding result over time. And this is the system that's gonna allow you to identify those supercycle stock journeys, if you will. And again, it's just a great point by Conor there. You don't need to get the bottom, right? That's ideal, right? But you don't need to get the bottom. If you end up, you know, by understanding the general sentiment of the market, and it may seem extended, you can still get some really great returns. Because even as we talked about, a couple hundred percent returns a year is amazing. Even if it was, you know, you're getting good base hits of 20%, 30%, so they all compound.

Exactly.

So it was absolutely incredible, Conor. I'm super, super excited to get this out there. Everyone at home, drop a comment with your biggest takeaway from this episode. Any questions you might have, throw them in the chat there. We'll check them out. Uh, but make sure you hit like, make sure you hit subscribe. Other episodes are on screen right now. We'll probably have Ted's episode and probably Pradeep episode right here on screen, so you can check those out. But links for Connor will be in the description below. This has been Chart Fanatics. Take care.