January 2, 2022

Stocks put in an uneventful week to close 2021.

Volume was predictably light given the time of year, and there were few moves of note among individual stocks.

Nasdaq breadth has been lackluster on this eight-day advance. As previously noted here and on Twitter, a market's health is best judged not by its behavior on a decline, but by its action on an advance following a decline. Specifically, we want to look at breadth, volume, and leadership.

Breadth started out decently on this advance, but has weakened since then. On the other hand, NYSE breadth has been good. Couple that with the large number of NYSE stocks that are building bases, and it appears the S&P is poised for richer quotations.

The game plan remains the same. For most speculators, cash is king. Virtually no pattern setups exist in the growth sector. We are not attracted to anything in the cyclical sector because we prefer to buy cyclicals that are part of clear group moves. Examples of this were seen last spring. Then, the oil & gas producers and metal ores advanced, which we participated in.

(It is like fishing. We prefer to go where there are schools of fish which increases our chances of success. Same with trading cyclicals.)

The short side is not appealing at this time. This will require, at minimum, the Nasdaq to roll over and resume its November-December downdrafts. Even then, the right setups need to appear at the right time.

When we are in unattractive markets like this one, I will usually abstain from taking a long when there are only a few ideas on the Focus List. I prefer to protect precious capital - both financial and mental - rather than go after that last percent or two of potential return. An exception would be a special situation, of which there are none at present.

With that said, the following names are believed to be the most attractive for our strategy of speculation in the $13+ market. They are for those very aggressive players that feel the need for long exposure.

Endava (DAVA)

Red Rock Resorts (RRR)

Encore Wire (WIRE)

In summation, cash is king for most speculators.

Kevin Marder

Trading Lessons
Introduction to the service video (38:00)
Money management and risk management video (20:27)
Bread and butter pullback video (11:10)
Bread and butter pullback: Pt II video (15:09)
Bread and butter pullback: Pt III video (31:48)
Bread and butter pullback: Pt IV video (30:16)
System R
Short-selling video (25:53)