November 3, 2021

The Fed's announcement today that it would begin a taper of its bond buying program, widely discounted by market participants, unleashed a wave of afternoon buying that jolted the averages further into virgin territory.

A plus was the increased volume in the Nasdaq market.

The distance between price and the 9 ema has slightly exceeded the 9/20 gap. This may suggest a pause in the next few days, perhaps if only to give the ma's time to catch up.

Whenever the first pullback of this rally occurs, it is likely to present a timely buying opportunity. As we have discussed, the first pullback post-breakout is a high-probability play. At that point, we should look to be opportunistic to take advantage of any catapult or spring-loaded effect in the top actors once the averages begin to recover.

More important will be to see which stocks continue their advance despite the Nasdaq pulling back.

This is possibly the third growth-stock rally this year in which the more-seasoned institutional quality names like Square SQ, Sea Ltd (SE), Twilio (TWLO), Crowdstrike (CRWD), (BILL), Shopify (SHOP), and Servicenow (NOW) are showing little progress. Cloudflare (NET) is an exception.

The view here is that institutions have played out these names over the past several years. The adjustment was made to only focus on the more-speculative glamours which have carried the day, plus a few seniors like Nvidia (NVDA) and Advanced Micro Devices (AMD).

We have been more aggressive than usual with some of our entries. This was reserved for issues showing real strength. I have explained the rationale for each of these and it is my hope that we are all learning from this. It was a result of an adjustment I planned to make once the August-September rally ended.

I am still holding my Tesla (TSLA) position which is +35% in nine days since the entry triggered from the Focus List. My plan to add to the position on the first pullback has been put on hold given the stock's move which has organically made TSLA a large percent of the account. Depending on your desired holding period, the more you add to a position, the more likely you will either be shaken out or will need to off part of it on a pullback.

The following names are believed to be the most attractive opportunities for our style of momentum-based speculation in the $13+ market.

Shockwave Medical (SWAV) broke out of an eight-week pattern Friday, +6.8% on +73% volume, triggering our Focus List entry. For those interested, it is 1% past the pivot and still buyable. Earnings ETA Nov 8 post close (confirmed).

Alphabet (GOOG)

Direxion Small Cap Bull 3x Shares ETF (TNA)

Progyny (PGNY)

Sentinelone (S)

In summation, the number of opps available to us has shrunk as many of the desirable names have already crossed entry points. Let's be patient and recognize that some of the emerging leaders will eventually pull back to provide secondary entries. Too, we are just three days into the historically favorable November-January period. The risk is a sharp backup in bond yields.

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)