Welcome back to the Weekly Trading Plan. Here’s what we’re covering:

• Market Pulse. Moving averages getting into order and what that means for aggressiveness.

• $SNOW [HOLDING]

• $HPE [HOLDING]

• $CIBR [HOLDING]

• $TEAM [HOLDING]

• $NVDA [HOLDING]

• $SHOP [HOLDING]

• $OSCR [NEW]

• $STX [NEW]

• $PWR [WATCHING]

• $TWLO [WATCHING]

• $NTRA [WATCHING]

• $ABNB [WATCHING]

• Closing Thought. Trade the market in front of us.

How we trade these names. This is not financial advice. Be sure to do your own research. Managing risk should always be your priority, and that means never blindly buying into names you see on a newsletter. Build your system and follow your rules.

Read more

In April I bought SanDisk. My cost average ended up in the mid $700s. I sold my shares right around $1900.

What attracted me to the name was an incredible increase in earnings and sales. A fundamental change in the business, in the memory space, and the money just flowing into this company. That’s what gave me the conviction to make the trade and the conviction to sit with it.

I’m not an accountant. I don’t read income statements beyond what I need to know. All I need to know is, where’s the money? If you follow the money in anything in life, good things are going to happen.

Everyone who trades or invests is constantly looking for new information that may not be available to everyone else. They’re looking for a catalyst. Something that happens that drives the stock upward.

A lot of the time the catalyst is right under our nose. It’s the earnings and the sales.

Stocks follow earnings.

What happened Wednesday

I did my trading plan over the weekend. The names that were leading were software, cybersecurity, biotech. Some of the big caps were acting pretty well.

The AI trade has been completely dormant this summer. Those stocks have been dead in the water. Under massive consolidation, massive pressure. Despite where they are from a technical perspective, I keep them in my universe because of the strong fundamentals. So I’ve been watching them and tracking where they trade, and there has been nothing but downtrends across these names.

Then Nebius reported.

Nebius is a stock I’m familiar with. It was one of my big winners during the last cycle, so naturally I was interested in what they had to say. I wasn’t surprised at all. They absolutely crushed it.

• Revenue of $582 million, growth of 454%

• AI cloud revenue of $575 million

• Four major contracts signed during Q2, each worth more than a billion dollars

• More than $40 billion in customer commitments

The stock was up 20% early and did nothing but get stronger through the day. It closed up 34% at $259.20.

That’s mass accumulation. Accumulation is the fancy word for the big institutions buying, the funds and the big money, and it’s what moves a stock over weeks and months. This was new information hitting the market, and it’s something to pay attention to.

So what the hell is a neocloud?

I had no idea what a neocloud was until I did some research, even though I traded one of these names.

All I knew was that it was an “AWS for AI”. That isn’t far off from the truth.

You have your traditional hyperscalers. When you think about a Salesforce or a DocuSign, a lot of those platforms are built on AWS, which is an infrastructure for cloud applications.

A neocloud is newer infrastructure built around GPU intensive AI workloads. The AI systems we use day to day, and the AI systems used in enterprise, have an incredible consumption on compute. They need dedicated companies to provide the infrastructure for that.

Nebius, CoreWeave, IREN, Hut 8 and TeraWulf are the names in that space. They’re also the top five holdings of NCLD, the ETF that tracks the neoclouds.

Why does anybody care? Because this isn’t one company making money. This is multiple companies in the same space with ridiculous growth, absolutely dominating in the marketplace right now.

That’s why we have to pay attention and look for the clues of when these stocks are under accumulation.

Which brings me to the charts.

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Nebius (NBIS)

Nebius had an incredible run from April 7 all the way through June 22, where it eventually topped at $299.86. Since then it’s been in a continuous downtrend through most of July.

In late July it stopped the downtrend and started to trade sideways, but in a very choppy manner. Very volatile. A range from 230 down as low as 145 at the 200-day moving average.

Before earnings it closed around 12% below its 50-day. That’s well below where we would typically look at stocks. It powered right through that level after this latest report and went straight up in the air.

Would I buy here? No.

There’s a possibility it works from here. I think there’s a better possibility of finding a setup in the coming week or so, or in the coming weeks. However long it takes.

It needs some sideways action. When you get a reprice like Nebius had, there needs to be agreement in the market, and that typically comes in the form of a consolidation and a digestion of the gains. The more this stock can stay sideways and not give up the immense gains from the earnings report, the better chance it has of a sustained move upward.

So we’re patient. The power Nebius showed is a signal to have this on your radar. From here we need a tradable setup.

CoreWeave (CRWV)

CoreWeave had a similar look. A huge gap today, up 20%, after a very long consolidation. You can argue the downtrend for CoreWeave started around May 7, earlier than Nebius.

Even before then, CoreWeave has been lagging. It hasn’t had the performance. You can tell just by the numbers that Nebius is the leader. Nebius has a cleaner return on equity, and cleaner EPS growth YoY.

CoreWeave does have a strong fundamental story. That story is wrapped into sales growth and acceleration, which I love. I always think sales is the key to any company succeeding.

I might be a little biased there as a former enterprise sales rep.

With a stock like this I’m waiting for sideways action again.

I’ve been studying gap ups for a while and I like to buy them when there has been a lot of sideways action first. This has been more of a gap up coming out of a downtrend.

So we wait on this one too. Very similar situation to Nebius. We’ll see if it gives us an entry.

IREN

IREN is a little different. It’s a bit of a laggard in terms of earnings and sales growth, and from a stability perspective.

What I don’t like about IREN is the deceleration in sales growth. I like to see that in reverse.

This one definitely needs more time. It’s below its 200-day. It’s below its 50-day. It isn’t looking as good as the other two on the list.

One to watch nonetheless, because it does seem to be rounding out the bottom of a base. If it can follow through with some strength, that’s a positive signal.

Hut 8 (HUT)

Hut 8 is a stock I’ve tried multiple times. I couldn’t make money on it. I never got it at the right time. It popped onto my screen and captured my attention at the end of the AI run.

It’s off its highs, but the decline and the consolidation aren’t as ugly as the others.

Right now it’s finding a lot of resistance at declining moving averages, which isn’t a good signal.

I drew a downward trend line I want to see Hut break before it gets serious and I start looking at setups.

I don’t know what it is about Hut. I love their earnings numbers. They just have good solid sales growth.

TeraWulf (WULF)

TeraWulf is a disaster. It’s gone straight down since June 22. It had a great run in April through June, and now it doesn’t look good.

This one is four for four below every key moving average. It’s under a tremendous amount of pressure, finding resistance at every single moving average, all of them declining on it. It’s an ugly, ugly chart.

They reported earnings on the fifth and there wasn’t much of a reaction. It was kind of a dud.

This one has to put in a lot of work to even be included in a watch list. I would spend my time on the top two.

How I rank them

Nebius. CoreWeave. Hut 8. IREN. TeraWulf.

You have a clear leader in the top two. I would also keep my eye on Hut.

One of the key reasons I sort them that way is relative strength. Relative strength is a rating that tracks how a stock has performed against every other stock in the market, around 6,000 names, not just the S&P 500. It’s one thing you always have to look at.

Why not just buy it

The reason you don’t pile into a stock, the way we trade, is that you want continued signals of accumulation.

A big part of accumulation is trading within a range. You’re looking for a sustained uptrend, so you want to buy out of a pattern that’s indicative of long term accumulation.

When funds and big institutions buy stocks, they can’t achieve their whole position in one day. Even though it felt like that with Nebius on Wednesday, it takes weeks and months for these institutions to build their positions.

So we look for the signals. I call them the elephant footprints. That was a huge footprint on Wednesday.

Now we want to see where the support levels are. If it drifts, if it has a consolidation and there’s an agreement between the buyers and sellers on a range of what the stock is worth, and it trades in that range for a few weeks or longer and then breaks again, we know we’re in a continuous cycle of accumulation.

Those are the entry points. Those are the low risk entry points.

Did it change how I see the market

It did.

You want to start to see leaders. Leadership in stocks is a funny thing, because just like in anything, the followers will follow the strongest individuals. There’s no difference with stocks.

You want to see signals that these companies are still present in the AI space, and Nebius made it very clear.

A 34% move isn’t retail investors on Robinhood moving that stock. That’s some big boys accumulating a massive amount of stock.

Nebius is a great business. A great business doesn’t always mean a great stock.

Nebius is essentially a resurrection, and it’s a really good sign for the AI trade for Nebius to be strong. So we want to watch that. It has absolutely earned our respect and it deserves our attention.

Tying it back to what we do, nothing is a better vote for a stock going up than that business making a ton of money.

We’ll continue to watch these names.

Happy trading. We’ll talk to you all soon.

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Welcome back to the Weekly Trading Plan. Here’s what we’re covering:

• Market Pulse. Why the Qs finally gave the green light, and how hard we pressed it.

• $SNOW [HOLDING]: our biggest winner, and far too extended to touch.

• $AMZN [HOLDING]: two gaps up, one of them filled, one line that matters.

• $CIBR [HOLDING]: the ETF I bought after getting shaken out of Palo Alto.

• $HPE [NEW]: bought the upside reversal, waiting on a handle to add.

• $NVDA [NEW]: gapped through its pivot in the middle of the base.

• $TWLO [NEW]: strong earnings gap, very wide day, scaled exit.

• $TEAM [NEW]: a 35% gap after five months of nothing.

• $NTRA [NEW]: 21% gap out of a high handle above the 200-day.

• $DELL [WATCHING]: stopped me out, then reversed hard the next day.

• $SHOP [WATCHING]: retesting the gap day highs after a fundamental turn.

• Closing Thought. Trading the market in front of you.

How we trade these names. This is not financial advice. Be sure to do your own research. Managing risk should always be your priority, and that means never blindly buying into names you see on a newsletter. Build your system and follow your rules.

Let’s get into it.

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TSLA, 2022.

I was heavy. Not 200% long, but well over 100%, and something close to 80 or 90 percent of my whole account sat in that one name. I had one other stock next to it.

The drawdown did not blow up my account. It blew up my confidence.

That loss was demoralizing in a way the number alone does not explain. It was a long road back. And the honest read on what happened is simple. That was me trying to be Bill O’Neil, and it not working.

I still use margin. But I have to earn it from myself first, and that is what this post is about.

The fund that got liquidated last week

By now you have probably heard of Situational Awareness.

It is the AI hedge fund started by Leopold Aschenbrenner, a former OpenAI researcher who left to build a fund around the most popular theme in the world. It had a great start. Up 439% from the beginning of 2026 through June. Assets peaked around $45 billion in early July.

Then last week it made worldwide news.

Aschenbrenner got margin called on his public positions. Bank of America, Goldman Sachs and JPMorgan were his prime brokers, and the fund had to sell the entire public book to Citadel at roughly a 10% discount. About $16 billion of stock, handed over. Assets fell to around $10 billion. He got to keep the private holdings.

The number that matters for our purposes: the fund had used as much as 400% leverage.

Nebius, SanDisk, Micron and CoreWeave were among its top disclosed positions. Each one shed more than 35% in a single month.

This is not the first time

Like most things on Wall Street, this has happened before.

There was a fund in the 90s called Long-Term Capital Management. It employed some of the best traders, economists and Nobel Prize winners you can think of. Myron Scholes and Robert Merton, who won the 1997 Nobel for the Black-Scholes model, sat on the board.

The smartest minds you can possibly think of, running sophisticated strategies with incredible returns.

Then August 1998 came and their positions turned against them. Their leverage was north of 25 to 1. Roughly $5 billion in equity controlling $125 billion in assets. They could not get out.

The fund lost $4.6 billion in under four months. The Federal Reserve had to intervene. Fourteen banks put up $3.6 billion in September of 1998 to wind the thing down in an orderly way. The Fed did not lend a dollar of its own money. It just got everyone in a room.

There is a great book on this called When Genius Failed by Roger Lowenstein. Highly recommended.

Two funds. Completely different strategies. Same recipe for disaster.

Really smart people. Highly leveraged positions.

I think being smart sometimes opens the door for stubbornness. When you have done that much analysis, admitting you are wrong gets very hard. The market does not care how much work you did. It is not forgiving for that type of individual.

A disclaimer, and I mean it:

This is not financial advice. This is a very sensitive topic. Talk to your financial advisor before you even apply for a margin account.

How I earn margin

Margin does not give you an edge. It magnifies the one you have, or the one you do not have. It adds octane. Rocket fuel, really, to whatever is already happening in your account.

So the question is never “can I borrow.” It is “have I earned it.”

First, the market has to be in a confirmed uptrend.

I am not going to spend a lot of time defining an uptrend here. Use whatever system tells you when to be aggressive and lean on it. For me it comes down to the key moving averages being in order. The 10-day above the 21-day, the 21 above the 50, the 50 above the 200. Rising and stacked.

If the moving averages are not in order and ascending, I do not consider margin at all.

Second, we have to be in a power trend.

Power trend is a term made popular by Mike Webster. The piece I lean on most: the daily lows of the Nasdaq, stay above the 21-day moving average for at least ten days.

Third, and this one matters more, my own trades have to be working.

The indexes can be great and you can still be out of sync with the market.

Your account gives you the best feedback you are going to get. Your most recent trades are the real read on how well you are trading and how in sync you are with what is in front of you.

Fourth, existing positions need a profit cushion.

Profit cushion means open gains you can afford to give back. I call it seeing a lot of green. It is what it sounds like. You open your brokerage account and everything is up.

A strong confirmed power trend, and your own trades doing really well inside it. That is when I find it advantageous to push the gas.

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Do not use margin to get concentrated in one name

I remember William O’Neil being famous for going 200% long in a single name. Trying to replicate that has cost me a ton of money. See the top of this post.

My full position is 20% of my account. If it runs, I trim back to 20%. If it keeps working I will let it grow into 25 or 30, and 25 to 30 is my ceiling. That is very concentrated for most people. I have heard 40 and I think 40 is too nuts.

So when I go on margin, it is not because one name got bigger. It is because other A+ setups showed up.

Here is what that actually looks like. Say there are two names with really strong upside reversals. Two of those, in a good market, while I am up. I will take both. That is an extra 40% of exposure across two names, on borrowed money.

Sometimes I will not even add a single stock. If the market looks strong but I am comfortable with what I already own in the leaders, I will just add index exposure. SPY or QQQ.

The point is you are adding different instruments. You are not going 150% into one name.

Sell down to the sleeping point

There is a famous saying, sell down to the sleeping point. I always thought that was anecdotal and a little silly. There is no system in it.

It is also completely true.

Marvell and Bloom Energy, in the middle of their runs. The positions had grown a little beyond my control. I could barely sleep. I had put so much into those trades and I knew I needed to reduce.

It is embarrassing to write that while I am preaching on being responsible. I still make these mistakes sometimes. It gets away from me and I try to rectify it.

If you are waking up at three in the morning to check the futures, you are too heavy. I have been there. Trust me, I have been there.

And if you are reading a piece about margin while trading growth stocks, you will be there at some point.

The risk of being too concentrated is not only blowing up your account. It is getting shaken out of a normal, natural pullback. I trade better when I can sit in a leader for a longer period of time, and I can only do that when the position is small enough to let me sit.

Find the position size that lets you sit.

The part margin cannot protect you from

I was on margin almost the entire month of April and most of May.

Then the AI trade got hit in June. I lost 11% of my total account in a single day. I was sick, in California, and I woke up to SanDisk down big.

There is always gap down risk. You cannot control that. Your stop does not execute on a gap.

You read what the market is doing and you go along with it. Sometimes the current is moving fast and in the right direction, and refusing to take any advantage of that is its own mistake if you are trying to grow a smaller account.

It is a double edged sword either way.

The checklist

Here is the one I run. I strongly recommend you build your own version, but this is mine:

The absolute no-gos

I usually do not talk in absolutes. These are absolutes.

Never use margin to average down.

Never use margin to recover.

Never use margin on a revenge trade.

Never go into an earnings report at a reckless size because margin let you.

Be careful out there

For a smaller account, margin can be a great asset. It can also be your worst enemy. Same tool, and the difference is you.

Use it in a strong market with the wind at your back, while you are already winning. Stay away from it on the losing streak.

Treat the market like a casino and it will treat you like a gambler. Treat it like a business and it will pay you like a business.

Operate as if you have to report your trades to a boss and every one of them has to be defendable. Run your own checklist before you do anything reckless.

Look out for the next trading plan this weekend. Happy trading.

Three lines for Notes

1. Margin does not give you an edge. It magnifies the one you have, or the one you don’t.

2. If you are waking up at 3am to check the futures, you are too heavy.

Treat the market like a casino and it will treat you like a gambler. Treat it like a business and it will pay you like a business.

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Welcome back to the Weekly Trading Plan. Here’s what we’re covering:

• Market Pulse. Where the NASDAQ rally attempt stands and what confirms it.

• $SNOW [HOLDING]: shaken out, bought back, one of the best charts in the market.

• $AMZN [NEW]: a 15% earnings gap out of months of nothing.

• $DDOG [WATCHING]: broke out, squatted back, and reports this week.

• $DELL [WATCHING]: the tidiest chart in the AI trade, sitting on its 50-day.

• $HPE [WATCHING]: very tight sideways action above the 50-day.

• $PANW [WATCHING]: reversed off the 50-day, no entry yet.

• $OSCR [WATCHING]: a clean consolidation with an early pivot and a real one.

• $ERX [WATCHING]: energy is setting up and this is how we get the octane.

• $DASH [WATCHING]: over 100 days dormant, and earnings hit Wednesday.

• $TEAM [WATCHING]: same setup, still stuck under its 200-day.

• Closing Thought. Getting shaken out is not a verdict.

How we trade these names. This is not financial advice. Be sure to do your own research. Managing risk should always be your priority, and that means never blindly buying into names you see on a newsletter. Build your system and follow your rules.

Market Pulse

The S&P looks a lot better, but the NASDAQ is the index we watch closest this week.

The NASDAQ put in a new low on July 29th, had a very big relief rally the following day, and made further price progress on the 31st right into its 21-day moving average. That puts us in day two of a rally attempt.

For anyone who does not know this system, here is the short version: After a market low, we count the days off that low and wait for a strong up day that confirms the uptrend is back. That is the follow-through day, made popular by William O’Neil. It has to come on day four at the earliest, and ideally between day four and day seven. That means we could get a follow-through on the NASDAQ as early as Tuesday.

We can also just use the 21-day moving average as our guide. Getting above it, and getting the day’s low above it, is another very constructive way to begin dipping a toe in the water and start looking for stocks in our ideal setups.

Here is the other read out of this week’s screening. The stocks that led the last cycle are still damaged. The semis and the memory names, the SanDisks and the MUs of the world, are at the bottom of their bases (in the best case scenario). They need time. What is actually set up right now is software, cloud computing, energy, and hardware. That lines up with O’Neil’s work, where the leaders of the last cycle typically do not lead the next one.

Earnings are thick this week. SanDisk reports, a ton of the AI names report. Do your due diligence before you enter anything, because you can get caught in an earnings gap the wrong way and it is not a great feeling.

Every entry below assumes the market follows through first.

, Snowflake [HOLDING]

One of the best charts in the market, bar none.

My first buy here was June 26th and I have held it since. It shook me out on July 28th when it undercut the 21-day, and then to my surprise it reversed to the upside and followed through into a breakout the very next day, where I bought it back on July 29th.

Friday brought a downside reversal. Given that it holds the low of its breakout day, which is $276.90, this stays very healthy. That level is the line.

Software has turned out to be a very strong sector, and this chart is the leader in it in terms of price action so far. If it loses $276.90, the story changes and the position comes off.

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I’ve been making the rounds on social media, looking through Reddit threads, looking through FinX.

It baffles me how many people treat the markets like a casino and take unnecessary, huge drawdowns in their account.

We’re living in an era where a big drawdown is almost a badge of honor.

Losing Money for Karma

I remember when WallStreetBets first came out in 2012.

It started off as kids who were trading options, and it was a place to go to feel better about losing all your money. You would blow up your account, but the trade-off would be that you would get a bunch of karma on the subreddit.

I never found that to be a great trade-off. I’ll take the money every time.

The “GameStop era” and that period where meme stocks were taking off, made phrases like “diamond hands” popular. It became a badge of honor to have massive drawdowns in your account, because it showed some sort of character that you had.

I actually got banned from the subreddit after suggesting sell rules. I guess I came off preachy, and it still makes me laugh to this day.

The Narrow Area Where You Have to Be Right

Investors have to understand that this “buy-the-dip” narrative is not a real strategy.

Dollar-cost averaging down (which means buying more of a stock that’s falling to bring your average cost down) is the fastest way to go broke. You’re operating in a narrow area where you have to be right.

There’s no other way around it. If you are not right, everything is gone.

I don’t find that to be an asymmetric risk. That’s the opposite of that. It’s a ton of risk.

The Line I Draw

I’m not completely against buying weakness. One of my best setups is the upside reversal, which is a dip within itself. But it’s a pullback to key support within a sustained uptrend.

I know that if the stock trades below the low of that support day, I was wrong and it’s time to close the trade.

I also never add to a losing position. As Paul Tudor Jones famously taught us:

“Losers Average Losers.”

When the market direction is against you, stocks are below key moving averages, and there’s red in your account, you’re essentially attempting to catch falling knives.

That’s not a game I like to play.

Where This Logic Flips

Now, in a long-term strategy where this makes sense: indexing.

By nature of the index, you don’t have to be right. You can be somewhat wrong, because you’re betting on the economy of the United States. If that goes to zero, then we have bigger problems. It’s gonna be the purge out there.

My own IRA account is in QQQ/VOO, and the strategy there is simply time + compounding.

The One Non-Negotiable

You can trade whatever strategy you want. If you feel like there’s value in the market, that’s okay.

But my one non-negotiable would be this: if you buy a stock, know exactly what price means that you’re wrong, and have a plan to get out.

Most strategies can work with an exit plan.

You can look through the history of the stock market over the last hundred years and see a graveyard of stocks that never came back, or, if you’re lucky, came back in twenty years to the same level. It happens all the time:

Beyond Meat, Peloton, and Red Robin were all hot stocks at some point. If you aggressively “bought the dip” on those, your account is in the brokerage graveyard as well.

Because if you can’t decide when to get out of the market, the market will decide for you.

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Welcome back to the Weekly Trading Plan. Here’s what we’re covering:

• Market Pulse. Whether the NASDAQ can get its moving averages back in order.

• $SNOW [HOLDING]: trading tight and sideways with the 21-day acting well.

• $PANW [WATCHING]: closed last week on a change in character.

• $DELL [WATCHING]: sideways near highs, still the best-looking AI name out there.

• $HPE [WATCHING]: basing and tightening, same reversal off the 50-day.

• $LLY [WATCHING]: a month and a half of chop, and a shape worth watching.

• $HUT [WATCHING]: choppy base, big gap up last week.

• $AMD [WATCHING]: holding up the best out of the semiconductors.

• $DDOG [WATCHING]: strong consolidation, finding support at the 50-day.

• $SNDK [WATCHING]: gapped up, got denied, gapped back down.

• Closing Thought. Why patience is the trade.

How we trade these names. This is not financial advice. Be sure to do your own research. Managing risk should always be your priority, and that means never blindly buying into names you see on a newsletter. Build your system and follow your rules.

Read more

It was Nintendo 64 and action movies for me. Lots of Star Wars and Goldeneye. I picked up a book only when I really needed to for school.

Then I started working at William O’Neil’s firm, and I learned quickly: Trading is a profession, and like any serious profession, it takes real study before it makes sense. Figuring it out from scratch costs you actual money, tuition you pay to the market in losses.

The shortcut is in finding mentors. The legends are immortalized in books, and when I got to the firm, the old traders handed me a list.

These are the ten that stuck. There are plenty more worth reading, but these are the ones I’d stand behind every time.

10. Stan Weinstein’s Secrets for Profiting in Bull and Bear Markets

This one is not the most beginner-friendly, but stick a pin in it for a few months into your journey.

Weinstein’s biggest contribution is mapping out the life cycle of a stock. He breaks every stock into four stages: the base, the advance, the top, and the decline. Once you see it, you can’t unsee it. You stop buying stocks that are rolling over and recognize when a stock is basing normally.

I don’t use all of his strategy, but the four-stage analysis is worth the price of the book on its own. Knowing where a stock sits in its cycle, and where the whole market sits in its cycle, is critical to trading successfully.

Takeaway: before you buy anything, ask which stage it’s in. You don’t buy a stock in decline just because it looks cheap.

9. One Up on Wall Street, Peter Lynch

This is the book that made a lot of things click for me, and it’s the one I’d put in a total beginner’s hands first.

Lynch drills one thing into you: earnings, earnings, earnings. It’s burned into my brain. From a growth angle, big earnings and sales growth are the fuel that makes a stock go. Everything else is arbitrary.

His other big idea is investing in what you know. You have an edge in your own industry that no Wall Street analyst has. The nurse sees which drug is working before the fund manager does. The engineer sees which product is pulling away. Lynch tells you to use your own expertise to your advantage.

Takeaway: you already have an edge somewhere. Start where you already understand the business.

8. Trade Like a Stock Market Wizard, Mark Minervini

Minervini is cut from the same cloth as O’Neil and Livermore, and you can feel it on every page. But he brings his own game too.

In my trading, his big contribution is the VCP, the volatility contraction pattern, which is a base that tightens up like a coiled spring right before it moves. It’s a setup every momentum trader should know. He’s also big on selling into strength and taking profits while the stock is still going up, which is harder than it sounds.

He’s also featured in the Market Wizards series and has a strong social media presence. When someone this good writes down his process, you have to read it.

Takeaway: learn the VCP. A base that gets tighter and quieter before it breaks is one of the most reliable tells there is.

7. Trading in the Zone, Mark Douglas

You will spend hours building your system. Back testing it, screening at night, doing your homework while the market is closed. Then the opening bell rings and you throw it all out the window.

It’s like the Mike Tyson quote: ”Everyone has a plan until they get punched in the mouth.”

That gap between the plan and the execution is what this book aims at. Douglas is writing about trading psychology, and his point is that a good system is useless if you can’t trust it in real time.

The goal he describes is a flow state. Like a basketball player who stops thinking and just reacts inside a set of moves he’s drilled a thousand times. You’re not agonizing over every decision. You’re calm, you’re reacting, and you’re operating inside parameters you already set for yourself when your head was clear.

Takeaway: the system is one piece. Learning to trust it when your money is on the line is the other half.

6. What I Learned Losing a Million Dollars, Jim Paul

Plenty of books teach you risk management. This is the one that makes you feel it.

Jim Paul was a guy who won at everything. Rose fast, made a fortune, and was never once conditioned to take a loss or to know when he was wrong. When it finally caught up with him, it destroyed him financially, mentally, and emotionally. The book is the story of that unraveling, and it teaches by showing you exactly what not to do.

What stuck with me: there are countless ways to make money. You can build something, sell a service, trade, grind a lucrative career and save, or inherit it. But there’s only one way to lose money, and it’s failing to take the loss. Refusing to admit when you’re wrong.

Takeaway: you don’t have to be right. You have to be willing to be wrong quickly. Taking losses before they get out of hand is high priority for successful investing.

5. How I Made $2,000,000 in the Stock Market, Nicolas Darvas

Everyone pictures a trader as someone glued to six screens all day. Darvas was about as far away from that as possible.

He was a professional dancer, touring the world, getting stock prices from the newspaper days after the fact. He couldn’t watch the market even if he wanted to. So he built a system around his circumstances. He noticed stocks traded inside “boxes,” ranges of support and resistance, and he only acted when a stock broke out of its box to a new high.

Without real-time data, without a finance background, he ran into the same truths Livermore and O’Neil found. Strong stocks trend, and the levels matter. It reads like a story, which makes it a perfect first book.

Takeaway: you don’t need to watch the market all day. You need a system that fits the life you actually have. (This is the one I’d hand a brand-new beginner.)

4. How to Trade in Stocks, Jesse Livermore

You can read this one in an afternoon. It’s short, it’s plain, and it’s the closest thing we have to Livermore explaining his ways.

This is the only book Livermore authored under his own name, and it’s essentially his method stripped to the bone. Trading in sync with the market. Support and resistance. Buying strength as it breaks out. Mechanics from the man who traded the markets 100 years ago.

Almost everything we do in momentum trading and growth investing traces back to ideas in this little book.

Takeaway: if you trade breakouts at all, this is a must. The genesis of the style, in your back pocket.

3. Market Wizards (the series), Jack Schwager

This was podcasts before podcasts. Schwager sits down with the best traders alive and just asks them how they do it.

I swap this in and out of the number one spot constantly. It’s that good. The original has William O’Neil and his protégé David Ryan, alongside Marty Schwartz, Richard Dennis, Paul Tudor Jones, and Ed Seykota. Legends, in their own words.

Here’s the big benefit of the structure: you don’t get one answer. You get twenty, and your brain starts hunting for the common threads. What do all these wildly different traders actually agree on? You’ll read it as one kind of trader and find one thread. You’ll read it again five years later as a different trader and find a completely new one. It’s a book you keep growing into.

My favorite is actually the newest one, Market Wizards: The Next Generation by Schwager and George Coyle, because it’s my generation of traders: Kristjan Kullamägi, Lance Breitstein, and a lineup of young standouts putting up numbers that rival anyone in the series.

Takeaway: don’t read this once. Reread it as you evolve. It gives you a different lesson every time, which makes it about as close to a fountain of youth as this game has.

2. How to Make Money in Stocks, William O’Neil

If you only read one book on this entire list, read this one.

It’s not my number one, but it’s the one I’d put in your hands if you could have just a single book. The orange cover. This book should be the foundation for your trading, as you build your own rules.

Open it and the first hundred-plus pages are just charts. A hundred of the greatest winning stocks in market history, marked up by O’Neil and his portfolio managers showing you exactly what a winner looks like before it runs. If the book were only those pages, it would still be worth it. It pays for itself before it says a word.

Then you get a deep dive into the CAN SLIM system. Seven characteristics the biggest winners shared before they made their moves. You learn it, and then you build your own system around it as you figure out how your own personality shows up in your trading.

I have a signed copy from William O’Neil himself. When I worked inside his organization, Bill made everyone read this book and pass a test on it before they could get a trading account. I’m so glad he did that. It changed my life, and I would not be doing any of this without this book and without Bill.

Takeaway: this is the one book to start with if you’re serious about growth stocks. Read the charts first, then learn CAN SLIM, then make it your own.

1. Reminiscences of a Stock Operator, Edwin Lefèvre

The best trading book ever written, and it barely feels like a trading book.

Most instruction books tell you how to do a thing. This one doesn’t. It’s written like a fable, a story you follow, and you pick up the lessons the way you’d pick them up in life, by watching a man live through them. It’s the Odyssey of Wall Street. You follow the hero through his wins and his ruin, and the wisdom lands on you throughout the journey.

That’s why it’s number one. Nobody learns from a list of rules the way they learn from a story they lived inside. Think about the Odyssey. You don’t remember a bullet point about caution. You remember the Trojan horse, and the lesson about gifts from your enemies rides along with it forever. Reminiscences does that for the market. It never spells it out. You just watch, and somehow you come out knowing.

It reads like your favorite movie, which means you can return to it again and again and get something new each time. I have never understood how there isn’t an actual film made of it. It’s one of the greatest stories ever told about one person against the market.

Takeaway: read this one for the story. The lessons will find you, and they’ll stay because you felt them instead of memorizing them.

That’s my reading list! Ten books, and every one of them earned its spot by changing how I see the market.

You don’t need a finance degree. You just need the willingness to be wrong quickly while you learn. These books can help you work through the problems you come across, but the real education you will find comes from experience.

Which of these have you read, and which one changed things for you? Tell me in the comments. And if you’re starting from zero, reply and I’ll point you to the right one first.

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Welcome back to the Weekly Trading Plan. Here’s what we’re covering:

• Market Pulse. Why breaking the 50-day changes how we size, and what has to happen before we buy again.

• $PANW [HOLDING]: clear leader of the cyber rotation, extended but acting right.

• $SNOW [HOLDING]: tightening sideways and surfing its averages, coiling for a move.

• $DELL [WATCHING]: undercut its whole base, then reversed off the 50-day.

• $RDDT [WATCHING]: lost its short-term averages, found the 10-week and held.

• $GEV [WATCHING]: reversed off the 50-day and barely closes below it.

• $TWLO [WATCHING]: an old winner, base building clean under its pivot.

• $DDOG [WATCHING]: going sideways on the 21-day, coiling under 277.

• Closing Thought. A time to fish.

How we trade these names. This is not financial advice. Be sure to do your own research. Managing risk should always be your priority, and that means never blindly buying into names you see on a newsletter. Build your system and follow your rules.

Let’s get into it.

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TLDR: A stock chart is a picture of supply and demand. Learn to read seven things on it and you can look at any stock and know, in about ten seconds, whether it is worth your attention.

Contents

• What a chart actually is. Price history, and what it is really showing you.

• Reading a single bar. The smallest unit on the chart.

• Volume. Elephant footprints.

• Trend and moving averages. Reading the direction.

• Why stocks move like stairs. They do not go straight up.

• Support and resistance. Floors and ceilings.

• How does it stack up against everything else. Relative strength.

• Putting it all together. Four questions, in order.

I remember the first time I pulled up a chart while working at William O’Neil & Co. I was overwhelmed and discouraged. It looked like an EKG and I thought I’d never crack the code.

That feeling is the reason this post exists. Nobody is born knowing this. It is a skill, it is learnable, and the barrier is smaller than it looks from the outside.

Here is the thing nobody told me that day: a chart is not a prediction. It is a record. It is a picture of what buyers and sellers have already done with real money. Once you see it that way, the squiggles turn into a story.

Let’s read it.

What a chart actually is

A stock chart is price history. Price on the vertical axis, time on the horizontal. That is the whole structure.

But what it is really showing you is supply and demand.

Every point on that chart is a moment where a buyer and a seller agreed on a number. Price went up because buyers were more motivated than sellers. Price went down because sellers were more motivated than buyers. That is it. That is the entire mechanism.

When you look at a chart, you are looking at a visual record of an argument between two crowds, playing out over months, with money on the line.

Everything else in this post is just learning to read the details of that argument.

Reading a single bar

The smallest unit on your chart is one bar. Each bar is one day.

The vertical line shows the day’s full range. The top is the high, the highest price anyone paid that day. The bottom is the low, the cheapest anyone got it for.

The little tick on the right is the close, where the stock finished when the bell rang.

That tick is the part that matters.

If the close sits near the top of the range, buyers were in control when it counted. The stock fought its way up and held there. Most charts color that bar blue.

If the close sits near the bottom, sellers had the last word. Whatever the stock did during the day, it gave it back by the end. Usually pink or red.

The close is the only price in the day that everyone has to agree on. It is the day’s verdict.

Now look at a full chart and understand you are reading hundreds of those verdicts in a row.

Volume: elephant footprints

Under the price bars there is a second set of bars. That is volume, and it is the number of shares that traded that day.

Here is why it matters more than almost anything else on the chart.

The market is not moved by people like you and me. It is moved by institutions. Mutual funds, pension funds, hedge funds. When a fund decides to build a position in a stock, they are not buying a hundred shares. They are buying millions, and they cannot do it in a day, so they do it over weeks.

You cannot see them. But you can see their footprints.

Volume is how you spot the elephants. When a stock moves up on huge volume, that is not retail traders. That is institutional money coming in. When a stock drops on huge volume, institutions are getting out.

Price tells you what happened. Volume tells you who did it, and whether they meant it.

A stock rising on light volume is a stock rising without conviction. A stock rising on volume well above its average is a stock with an elephant behind it.

Learn to look at price and volume together, always. They are one signal, not two.

Trend and moving averages: reading the direction

A moving average is the average price of a stock over a set number of days, plotted as a line. The 50-day moving average is the average closing price of the last 50 days. Every day it updates.

That sounds academic. It is not. Here is what it actually represents:

The 50-day line is roughly what everyone who bought this stock in the last two and a half months paid for it. It is the crowd’s average cost.

And it turns out that institutions watch these lines closely. When a stock they own pulls back to its 50-day, that is often where they step in and buy more. The line becomes a place where support shows up, over and over, because large money is defending its position.

This is why the moving average is how you read the trend.

A stock living above its 50-day, with the line rising underneath it, is in an uptrend. Buyers are in control, and every dip gets bought.

A stock living below its 50-day, with the line falling above it, is in a downtrend. Every rally gets sold.

You do not need indicators or oscillators or anything else to answer the most important question about a stock. Where is it relative to its moving average, and which way is the line pointing.

That is the trend.

Why stocks move like stairs

Here is the thing that took me the longest to accept:

Stocks do not go straight up.

When a stock makes a real move, it runs, and then it stops. It goes sideways for weeks or months. It does nothing. And then, if the story is still intact, it runs again.

Leg up. Plateau. Leg up. Plateau.

It looks like a staircase.

The plateau is not the stock failing. The plateau is the stock working. After a big move, the people who bought early are sitting on profits and want to take them. The stock has to absorb all that selling before it can go anywhere. It has to find new owners at the higher price, people who are willing to hold.

That takes time. That is what the sideways stretch is.

This matters enormously for how you buy stocks, because it tells you where the opportunity is. You are not trying to catch a stock in the middle of a leg, when it is already extended and every buyer is already in. You are trying to catch it at the end of a plateau, right as the next leg begins.

The staircase is the map. Your job is to figure out which step you are standing on.

Support and resistance: floors and ceilings

Now zoom into one of those plateaus and look at what is actually happening.

The stock is not sitting still. It is bouncing between two levels.

There is a price it keeps falling to and bouncing off. That is support. It is a floor. Every time the stock gets there, enough buyers show up to stop the decline.

There is a price it keeps rising to and failing at. That is resistance. It is a ceiling. Every time the stock gets there, enough sellers show up to stop the advance.

Floors and ceilings are made of memory. Resistance exists because there are people who bought at that price, watched the stock fall, and have been waiting to get back to even so they can sell. When the price returns, they sell, and the stock stalls. Support exists because there are people who wanted in at that price and missed it, and they are waiting.

So mark them. When you look at a chart, the first thing worth drawing is a horizontal line at the obvious floor and the obvious ceiling.

Now here is where it gets useful.

When a stock breaks through resistance, something has changed. All the sellers who were waiting at that ceiling are gone. They have been absorbed. There is nothing overhead. That break is called a breakout, and it is one of the core ways we buy stocks. It is the moment the next leg of the staircase starts.

When a stock breaks below support, something has also changed, and you need to care about this one more.

That floor was holding for a reason. If it breaks, the reason is gone. The buyers who were defending that level have stopped defending it.

We are defense first at Ghost Alpha, and this is where that lives. Knowing where support is means knowing where you are wrong. If you buy a stock and it breaks the level that was supposed to hold, especially on heavy volume, you do not negotiate with it. You are out.

Buying breakouts is how you make money. Selling broken support is how you keep it. The second one is the harder skill and the more important one.

How does it stack up against everything else

Every stock is in a race against every other stock.

If you are going to pick individual stocks, you had better be picking good ones. Otherwise, buy the index and go do something else with your afternoon. The entire justification for stock picking is that you are getting the cream of the crop.

So how do you know?

Relative strength rating is a score from 1 to 99 that ranks a stock’s price performance against every other stock in the market, roughly six thousand of them. An RS rating of 90 means the stock has outperformed 90% of all stocks over the last year.

The rule of thumb is simple. Look at stocks with an RS rating of 90 or better. You are not trying to find the one everyone has forgotten. You are trying to find the ones already winning.

The relative strength line is the visual version. It plots the stock’s performance against the S&P 500 as a line underneath the chart. When the line rises, the stock is outperforming the index. When it falls, it is lagging.

The rating tells you where a stock stands right now. The line shows you the history, and history is where the useful signal lives.

The thing to look for is a relative strength line making a new high. When that line pokes into blue sky, it means the stock is stronger relative to the market than it has ever been. That is a stock that institutions are choosing over everything else available to them.

An RS line hitting new highs while the stock is still working on a plateau is one of the most useful things you can see on a chart. The line is telling you what is about to happen before the price does.

Putting it all together

Here is Apple, daily chart, roughly a year of price action.

This is not a recommendation and it is not analysis. Apple is here because it is a stock everyone knows, and because its chart happens to show every component this post covered. We are just labeling the parts.

You now know how to read all four.

1. The trend. The red line is the 50-day moving average. Price is above it and the line is rising underneath. Back in April the stock came all the way down, touched it, and buyers stepped in. That is what an uptrend looks like on a chart.

2. The plateau. From December through April, Apple went sideways. Four months of chop with a floor and a ceiling, going nowhere. That is a step in the staircase.

3. New highs. The most recent bars are at the top of the range. When a stock is here, there is no overhead supply above it, because nobody who owns it is waiting to get back to even.

4. Strength. The blue line at the bottom is the RS line, and it has been climbing since May. The rating sits at 89. Down in the volume panel, that spike in early July at 374% above average is what an elephant looks like when it steps.

That is the whole vocabulary. Trend, staircase, highs, strength, and volume underneath all of it.

Every chart you look at from here is some version of this one.

What this post does not teach you is what to do about it. Reading a chart and deciding where to buy, where to get out, and how much to risk are different skills, and the second one takes longer.

Now that you can read a chart, the actual journey starts.

Reading is the easy part. Everything after this is judgment, and judgment takes reps.

That is what Ghost Alpha is. I post my read on the market most days in Notes, in real time, as it happens. Once a week there is a longer post: analysis, education, an outlook on where the market stands and where the opportunities are setting up.

And every week we go through growth names one by one. Stocks that are actually growing, the ones with a real shot at becoming true market leaders. We look at where they are actionable, what the story is, whether the fundamentals hold up. Same components you just learned, applied to real names in real time.

Stick around. There is a good community here, and everybody in it started exactly where you are right now.

Subscribe below. And if something in this post did not land, reply and tell me. I read every one.

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Market Pulse. A read on whether the QQQ resolves its tightening range higher or needs more time to chop, and what six distribution days means for how aggressive we get on new buys.

The Focus List. 9 names worth your attention this week. Charts, commentary, and the levels that matter for each one. Current holdings are tagged. The rest are setups we are watching.

Quick reminder before we get into it:

Nothing in here is financial advice. This is one trader’s read on the tape and the names worth watching. Do your own research, manage your own risk, and never trade money you cannot afford to lose.

How we trade these names. Every name in here is traded the same way, and you should understand the rules before you act on a single one of them. We use a 5 to 7 percent stop from our entry, no exceptions. We know where we are getting out before we get in, and we set the stop the moment we buy. We manage risk first and chase gains second. Our entire edge is taking losses quickly and letting winners run, which means we are often out of a name fast when it does not work. Do not assume any name listed here is still a position by the time you read this. A stock appearing on the Focus List is not a signal to buy and hold. It is a setup we are watching with a defined risk plan. If you cannot define your risk and honor your stop, do not take the trade.

Let’s get into it.

Market Pulse

The QQQ is up to six distribution days, and normally that number puts us on alert. But the price action is telling a more constructive story than the distribution count alone. The index is coiling into what looks like a volatility contraction pattern, getting tighter and tighter as it moves sideways. The SPY is doing the exact same thing. We are technically in chop, but the majors are tightening rather than breaking, and when that contraction shows up in the index itself and not just in individual names, that is a strong tell for the general market.

The traffic light is mostly green, with one flag. The Russell has held above its 21-day almost the entire stretch. It dipped below intraday on Wednesday July 8th and recovered fast, and Friday’s bar closed above the 21-day but the low is dipping just underneath. Our rule is simple. We want the low of the price bar above the 21-day before we put on new risk. Green light, red light. Small caps performing is our risk-on confirmation, and right now it is a soft yes, not a firm one.

This is a decision week. Either the majors follow through on this pattern, or they need more time to chop, or this rolls into something deeper. All three are on the table, and none of them would be a shock. The setup looks good. Good is not the same as confirmed. We stay measured until the follow-through prints.

The Focus List

$PANW, Palo Alto Networks [HOLDING]

PANW did nothing wrong. It had an incredible run and one of our better trades of the year, and then it pulled 15 percent off its highs in two days. Aggressive, a little scary in the moment, and completely normal for a name that ran that hard. It is holding above the 21-day and respecting it well.

It broke the 10-day, which is where we trimmed, but we are still holding a core position. The 21-day is the line in the sand. It can trade below it intraday and we are fine. A close below the 21-day forces us out. Cybersecurity as a group is acting well, which keeps the backdrop supportive. For now this is a hold-and-honor-the-line situation, nothing to do but let it work and respect the stop.

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For years I thought the finish line was a watch.

A Rolex Datejust 41mm with the fluted bezel, the grey and green dial they call “The Wimbledon”. That was the picture in my head of what success looked like. Not a number in an account. A specific object I could put on my wrist and finally feel like I had made it.

I bought lesser watches on the way there. An Omega Speedmaster. A Tudor GMT. Good watches, but in my mind they were placeholders. Stepping stones to the real thing.

Then one day the jeweler called. He had one for me. I remember the excitement, the drive over, the feeling of finally paying for the thing I had wanted for years.

I felt accomplished for about a day.

Then I just stopped reaching for it. It was never the right occasion. In some rooms it felt like it made me look like I was trying too hard. So I kept grabbing the Tudor instead, because it was lighter, easier, more me.

At some point I started telling myself the Rolex would be something I passed down to my son. And that’s when it really hit me. My son isn’t going to want the watch I bought and left in a drawer. He’s going to want the watch he actually saw on my wrist.

The Rolex was never a dream. It was a trophy for a race I didn’t choose to run.

The trap has a name.

Psychologists call it relative deprivation. You don’t feel behind because of what you have. You feel behind because of what the people around you have. Your neighbor puts in a patio, and suddenly your perfectly good backyard needs a patio. A friend shows up in a new car, and the car you drove happily for three years starts to feel embarrassing.

The comparison never ends, because the moment you catch up, the reference point moves. Somebody always has the nicer thing. So you take the promotion you didn’t really want, at the job that quietly bores you, to fund a life that was designed by people you’re trying to impress.

You slowly mold yourself into whatever you think the world expects. The new title, the new car, the right zip code. And every one of those choices costs a little piece of the actual you. Your independence. Your creativity. The quest you would have picked if nobody was watching.

That’s a miserable way to live. And almost nobody notices they’re doing it.

Getting free starts with subtraction.

Bill O’Neil used to boil the whole thing down to three words. Work, save, invest. Simple. So why does almost nobody pull it off?

Because a fourth word sneaks in between save and invest. Spend. Every raise gets eaten by a slightly nicer version of the life you already had, and the savings never show up.

Breaking out doesn’t start with making more. It starts with wanting less. Going back to the essentials. Getting honest that the next thing on the list, the watch, the patio, the upgrade, is not going to move your happiness at all.

Most of the time it’s true, and the wanting just dissolves. What’s left is money you get to keep, and a clearer picture of what you actually want your life to be about.

That clarity is the whole point. Happiness was never in the object. It’s in getting to be your full self and chase the thing you’d chase if no one was keeping score.

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Then you start. Small.

Here’s where people freeze. They decide they need a huge pile of money before they can begin, so they never begin.

That’s another trap. You don’t need a fortune to learn. You need a small stake you can afford to put at risk while you figure it out.

Say you’ve decided you can devote a thousand dollars to learning to trade. Don’t deploy all of it. Take a quarter of it, two hundred and fifty dollars, and trade that. Leave the rest tucked away where you can get to it later. Learn on that small slice, with real money, because the emotion of a live trade is the one thing paper trading can never teach you. Once you’re actually profitable on the small stake, you bring the rest in slowly, a little at a time.

And to be clear, I’m not telling anyone to quit their job and go trade. The day job is what funds the quest. There may come a day when you have the security to choose differently, but that day is earned, not rushed. Until then, the paycheck buys you the freedom to learn without fear.

After that, it’s just grind.

Nothing worth having skips this part.

With trading, the grind is studying. Looking at charts until the patterns start to jump out on their own. Building a strategy, writing your rules, learning where you’re strong and where you get into trouble. It’s spending a Saturday night building a model book of setups instead of doing something more fun. That’s not glamorous. That’s the sacrifice, and the sacrifice is the edge.

If you’re asking how to get better, the answer is almost never trade more. Trading more just gets you into trouble faster. The answer is study more. Look at more charts. Take your time. Keep iterating on your rules.

There’s a line in Atomic Habits that every choice you make in a day is a vote for the person you’re becoming. Trading is no different. Every chart you review, every rule you honor, every loss you cut without flinching is a vote. You don’t become that person in a weekend. You build them one vote at a time.

You can just pick a different race.

That’s the whole thing. You don’t have to run the one you were handed. The car, the title, the watch, none of it was ever the assignment. You can put it down and choose your own.

Trading is one way through. If your thing is a business, or a craft you’ve spent years getting good at, the same law holds. Consistency plus volume plus enough time, and the outcome stops being a question. You’d almost have to try to fail.

By the way, anyone in the market for a Rolex? I have one for sale.

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Ghost Alpha is a documentary of one trader’s journey and a plain-language education in how markets actually work. No gurus, no gatekeeping. If that’s your kind of thing, subscribe and come along.

This is what we are covering this week.

Market Pulse. A read on the NASDAQ tightening after a month of chop, why the Russell 2000 is the outlier, and what a still-consolidating tape means for how aggressive we get on new buys.

The Focus List. 11 names worth your attention this week. Charts, commentary, and the levels that matter for each one. Current holdings are tagged. The rest are setups we are watching.

Quick reminder before we get into it. Nothing in here is financial advice. This is one trader’s read on the tape and the names worth watching. Do your own research, manage your own risk, and never trade money you cannot afford to lose.

How we trade these names. Every name in here is traded the same way, and you should understand the rules before you act on a single one of them. We use a 5 to 7 percent stop from our entry, no exceptions. We know where we are getting out before we get in, and we set the stop the moment we buy. We manage risk first and chase gains second. Our entire edge is taking losses quickly and letting winners run, which means we are often out of a name fast when it does not work. Do not assume any name listed here is still a position by the time you read this. A stock appearing on the Focus List is not a signal to buy and hold. It is a setup we are watching with a defined risk plan. If you cannot define your risk and honor your stop, do not take the trade.

Market Pulse

The whole story right now is the indexes, so that is where we are spending our time this week. The NASDAQ has been consolidating since the start of June and the swings have been wide, with most of the volatility landing on the AI trade and the old leadership. What matters is the shape of it. The first leg down was violent, high to the 50-day in four or five sessions. The recovery stopped short of the highs. The next leg down did not undercut the prior lows. Each swing has been tighter than the one before it, and last week followed the same script: a rally to start, then two days of selling to close it out.

The QQQ and the S&P are tracing the same tightening pattern. The one outlier is the Russell 2000, which is chopping higher, showing real relative strength and refusing to participate in the squeeze the others are in. That is our secondary traffic light, and it is leaning green even while the big-cap indexes rest.

We do not go all in or all out based on any of this. We check the forecast, then we go looking for boats. Right now the forecast says patience. We want to see a clean break of this range before we press. Until then we keep our stops tight, respect relative strength, and stay ready for a leg either direction.

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When I first opened a brokerage account, I had no idea what I was doing.

I was buying penny stocks. Chasing biotech’s my uncles were talking about. And I had exactly zero plan for when to get out. Not for when things went well, not for when things went badly. It never even occurred to me that getting out was a decision you were supposed to make on purpose.

I don’t think I was unusual. I think that’s where most people are.

Most people buy a stock and that’s the end of the thinking. They’re going to hold it. There’s no exit plan in either direction. And I’ve come to believe that this one blind spot is why people get so wrapped up in narratives. The bubble talk. The “this can’t last.” The bear thesis they cling to. When you believe your position is permanent, you have to be right about the whole future. That’s an impossible amount of weight to carry on a single stock.

It’s not permanent. There are rules for getting out. I use three of them…

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Rule 1: Cut the loss from your entry

This is the first skill you should build. Before pattern recognition, before anything. If you learn nothing else, learn this.

Here’s how I actually do it.

O’Neil famously preached an 8% stop. But he never really connected it to how big your position was, and that’s the part that matters. A stop only means something in the context of your total account.

The rule most serious traders and fund managers live by is this: never risk more than 1% of your total equity on a single trade. Not 1% of the position. 1% of everything you’ve got.

So I work backwards from that. My standard position is 20% of my account in one stock. If I put 20% into a name and it drops 5%, that’s a 1% hit to my total equity. So my stop goes at 5% below my entry.

That’s the whole system in one line: size your position so that your stop equals a max of 1% loss to your total account.

Keep your stops somewhere between 5% and 8% from your entry. Eight is the absolute ceiling, never more. I personally live in the 5 to 7% range. Run your own math on your own position sizes and find the spot where a stop-out only costs you about 1% of the account.

The other place I’ll set a stop is the low of the day on the day I bought. If I entered on a breakout or an upside reversal, that day’s low is a line that matters. Break it and the reason I bought is gone.

This rule alone will do more for you than any indicator you’ll ever learn. It’s boring, but it’s the closest thing to a superpower I’ve found in this business.

Rule 2: Take some profits into strength

The first rule keeps you alive. This one is the first rule that actually makes you money on purpose.

Say you cut losses at 5% and you take three losses in a row. Then you sell one winner into strength at a 20% gain. You were only right one time out of four, and you still came out ahead. You don’t need a high batting average. You need your winners to be bigger than your losers, and you need the discipline to actually ring the register.

Now, how much you sell depends on your time horizon. I tend to hold for the bigger move, somewhere between three months and a year, so I’m not dumping my whole position at a 20% pop. But I am trimming.

Here’s why trimming matters even when the amount feels small. Say you had a 20% position and the stock runs. Now it’s grown to 22 or 23% of your account just from the gain. If I trim it back to my original 20%, I’ve locked in real profit and gotten the stock back to the weight I wanted. Small transaction but a big psychological effect. It gets you in the habit of realizing gains instead of just watching them on a screen.

There’s a companion move that lives inside this rule, and I want you to treat it as automatic: once a stock works and moves up, raise your stop to your entry price. Breakeven. The moment your trade proves itself, you take the possibility of a loss off the table.

Do those two things together, trim into strength and move your stop to breakeven, and something powerful happens. Even if the stock round-trips all the way back down, you made money. You rang the register on the way up, and you got stopped out at breakeven on the rest. You cannot lose on that trade anymore.

That’s not just protecting your capital. It’s protecting your confidence. You lose faith in yourself fast when you keep watching gains evaporate back to zero. Protecting your mental capital is every bit as important as protecting the dollars.

Rule 3: Use moving averages as your trailing stop

This is how I sell most of my winners.

Say everything went right. The first two rules never had to fully trigger because the trade worked from the jump. You moved your stop to breakeven, you trimmed some into strength, and the stock kept going. Now you’re holding for the big move.

When I study a chart, one of the very first things I look for is which moving average the stock respects. Where has it found support before? That’s the line I’ll use to trail my stop, because that’s the line that tells me when the character of the stock has actually changed.

O’Neil talks about the 50-day as the ultimate line in the sand, and I completely agree with it. I don’t own stocks under their 50-day. Period.

But the 50-day is sometimes a long way down from where a stock is trading, and I want to move a little quicker than that on the way out. So I use two lines:

The 21-day is my first trim trigger. A stock can dip below the 21-day intraday, that’s fine. But when it closes below the 21-day and then can’t reclaim it, that’s a change in behavior. That’s where I’ll start scaling down.

The 50-day is the line in the sand. A decisive close below the 50-day and I’m out of what’s left. No debate.

So it becomes a way to scale out in stages. Say a position has grown to a 30% max size because I’ve let a winner run. If it breaks the 21-day, I might take it down to 20%, back to where I started. If it then breaks the 50-day, that’s when I exit the rest completely.

One exception: The 200-day is only relevant for a true long-term holding. A stock you’ve owned for years, a genuine market leader, something you’re holding for a move that takes a long time to play out. Even then, a close below the 200-day is blasphemy. I’ve never found a good reason to sit through it.

Bringing it together

Those are the three. The three that have kept me from blowing up in over a decade of doing this.

Cut your losses fast from your entry, and don’t be shy about it. The best trades usually work right away. If you trade long enough to string a couple winners together, you’ll feel this in your bones. You don’t need to give every stock extra room and extra time and extra chances. There’s always another opportunity coming.

It’s okay to have high expectations for where you put your money. The market should work for your money, not the other way around. So get comfortable with this: it didn’t work right away, you’re fired. Never get married to a stock.

The most important thing underneath all three is just this: have a plan before you’re in the trade. Know where you get out on the downside and know what you’ll do on the upside, and decide both of those things before you click buy.

That’s how I stay in the game.

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This is what we are covering this week.

Market Pulse. A tale of two markets. The NASDAQ composite and the QQQ are telling different stories, the Mag 7 is getting hit hard, the AI names are resting, and small caps are quietly leading. We break down all four indexes and what the divergence means for how aggressive to be right now.

The Focus List. Eight names worth your attention this week. Three we hold, five we are watching. Charts, commentary, and the levels that matter for each one. Current holdings are tagged. The rest are setups we are watching.

Quick reminder before we get into it. Nothing in here is financial advice. This is one trader’s read on the tape and the names worth watching. Do your own research, manage your own risk, and never trade money you cannot afford to lose.

How we trade these names. Every name in here is traded the same way, and you should understand the rules before you act on a single one of them. We use a 5 to 7 percent stop from our entry, no exceptions. We know where we are getting out before we get in, and we set the stop the moment we buy. We manage risk first and chase gains second. Our entire edge is taking losses quickly and letting winners run, which means we are often out of a name fast when it does not work. Do not assume any name listed here is still a position by the time you read this. A stock appearing on the Focus List is not a signal to buy and hold. It is a setup we are watching with a defined risk plan. If you cannot define your risk and honor your stop, do not take the trade.

Let’s get into it.

Market Pulse

This is a tale of two markets, and the whole plan this week hinges on understanding it.

Start with the divergence everyone is talking about. The NASDAQ composite just put in its fourth straight close below the 50-day moving average. In any normal read, that is a flag. But the most recent low of 25,014 has not undercut the June 9th low of 24,980. We are holding the range. That keeps us sideways, not downtrending. A break of that low changes the conversation.

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I spent the majority of my time looking for the perfect stock. The right earnings, the right chart pattern, the right story. Hours on weekends going through setups. I’d find one I loved, buy it, then watch it go nowhere. And I’d come away thinking I’d missed something about the company.

I hadn’t missed anything about the company.

I’d missed the ocean.

There’s a concept that changes how you think about markets once you hear it.

Nine out of ten stocks are going to follow the general market. That’s not an opinion, it’s a historical fact that William O’Neil spent decades documenting. The best stock in the world is still mostly a hostage to the environment it trades in.

Think about it this way: Everyone is obsessed with which boat they want; which stock to buy, which chart looks cleanest, which setup is highest conviction. But it doesn’t matter what boat you’re in if the ocean is in the middle of a storm. You’re not getting from point A to point B regardless of how fast your boat is.

The market is the ocean. You have to watch it.

Markets cycle through three broad conditions. Uptrend. Downtrend. Sideways range. Your job as a growth investor is to know which one you’re in at all times, because each one calls for a different level of involvement. Aggressive, defensive, or patient.

The simplest tool I’ve found for this (and I’ve seen versions of this idea attributed to a few different market legends going back to the Market Wizards era) is the 200-day moving average. If the market is living above the 200-day and finding support there, the long-term trend is up. If it’s been struggling below the 200-day for an extended stretch, you’re in a bear market. That’s the broad lens.

But I think about it with a little more nuance than just bull or bear.

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I break the market into three time frames, and each one has a moving average.

The 21-day moving average represents the short-term trend. The 50-day represents the intermediate trend. The 200-day represents the long-term trend.

When the NASDAQ starts to reclaim the 21-day and trade comfortably above it after a correction (meaning the low of daily trading bars is sitting above it, not just poking through), that’s my signal to start pilot buying again. Testing the waters. Not full throttle, but back in the game.

The 50-day tells me the intermediate trend has recovered. At that point, I’m more active.

The 200-day closing back over tells me the long-term trend has reset. That’s a green light for the patient capital.

Now here’s where it gets specific for growth investors.

When you’re trading high-momentum names and buying strength, you don’t just want the market above these levels. You want the moving averages in order.

MA’s “in order” means: the 21-day is above the 50-day, and the 50-day is above the 200-day. All three sloping higher.

That configuration tells you money is flowing into risk assets consistently across all three time frames at once. Short-term, intermediate, and long-term all trending the same direction. That’s what I call growth mode. That’s when I’m initiating new positions and pressing my best setups:

When that picture breaks down and the 21-day starts to cross below the 50-day, or the 50-day turns sideways and starts threatening the 200-day, that’s a warning shot.

There’s a secondary signal worth knowing about.

When growth starts to fade, institutional money doesn’t just sit in cash. Fund managers are running client money and they have to stay invested. So they rotate. Money comes out of high-octane growth names and into defensive sectors. Consumer staples. REITs. Utilities. Procter and Gamble starts perking up when growth is rolling over.

If you’re scanning for setups and you notice a lot of regional banks and consumer staples names looking clean while your growth watchlist is a mess, that’s the rotation telling you something. The market’s risk appetite has changed, even if the index hasn’t fully broken down yet.

Pay attention to what’s setting up. It tells you where the money is going.

Here’s what I love most about this.

Individual investors have an advantage that almost no one talks about. We can go to cash.

Portfolio managers at Fidelity and BlackRock cannot do that. They’re managing customer money with mandates. When things get choppy, they rotate defensively. They can’t hide. We can.

Going to cash isn’t giving up, it’s discipline. It’s our biggest edge. the market will always give you another chance to deploy capital when conditions improve.

(Keep in mind that this doesn’t apply to indexing or other long term investment strategies.)

Right now the market is in a range. It’s a time to be watching, building your list, and identifying which stocks are refusing to break down while everything else does. This is also a good time for upside reversal set-ups.

And if you’ve done the work, you’ll be ready.

Ghost Alpha documents one trader’s real-time journey through the market. If this was useful, subscribe for weekly analysis, setups, and the occasional hard lesson learned.

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None of this is financial advice. This is one trader’s read on where leadership sits right now.

Three groups are leading this market. Keep your eyes on the leadership within these groups for potential entries into market leading moves.

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Theme One: The AI trade, and it lives in the chips.

When people say the AI trade, they mean four things wearing one jersey: semiconductors, memory, neoclouds, and energy. They tend to move together.

The chart that matters is SMH, the semiconductor ETF. It carries a 98 relative strength rating, which tells you plainly where leadership sits. Semis are the cleanest read on where this market wants to go.

The swing factor this week is Micron. MU reports Wednesday, and memory sits right inside this theme. A weak print is a speed bump for the whole AI trade. A strong one could be the trigger that sends these names straight up. It is the most important event on the calendar this week.

If leadership stays here, and right now it is here, you want a plan for how you would get exposure if the group keeps running.

Theme Two: Biotech is quietly setting up.

The chart here is XBI. It spent most of the year going sideways, basing and building, the same patient consolidation the AI names did before they ran. On Wednesday the 17th it broke out of that flat base to new highs on good volume.

For a while the assumption was that software would be the second engine of this market. Software is showing its hand a little, and it needs more time. Biotech is the group actually shaping up.

What we want now is follow-through. A breakout is a claim. Follow-through is the proof. Watch XBI to see if the move holds and whether the leading names confirm it.

Theme Three: Quantum found its footing.

The ETF to watch is QTUM. The major quantum names had a meaningful end to the week, several of them bouncing right off the 50-day moving average. When a whole group finds support at the same logical level, the market is telling you something.

Some of these names carry real earnings and sales growth underneath a story that already gets people excited. That is a rare combination.

QTUM is shaping up for potentially higher prices. The thing to confirm is whether the real leaders in the group follow through, because the ETF can only take you so far.

That is the map. Chips leading, biotech setting up, quantum waking up, and a Micron report Wednesday that could shift the whole tone.

If you want the specific names inside these themes, the pivots, the entries, and exactly how we are managing risk on each one, that is what the Weekly Trading Plan is for. It goes out with the charts and the levels.

Have a great week. Watch the leaders!

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This is what we are covering this week.

Market Pulse. A read on a clean uptrend with the moving averages stacked in order, the Russell confirming risk-on, and why Micron’s earnings Wednesday could decide whether the chip trade goes parabolic or stalls.

The Focus List. Ten names worth your attention this week. Charts, commentary, and the levels that matter for each one. Current holdings are tagged. The rest are setups we are watching.

Quick reminder before we get into it. Nothing in here is financial advice. This is one trader’s read on the tape and the names worth watching. Do your own research, manage your own risk, and never trade money you cannot afford to lose.

How we trade these names. Every name in here is traded the same way, and you should understand the rules before you act on a single one of them. We use a 5 to 7 percent stop from our entry, no exceptions. We know where we are getting out before we get in, and we set the stop the moment we buy. We manage risk first and chase gains second. Our entire edge is taking losses quickly and letting winners run, which means we are often out of a name fast when it does not work. Do not assume any name listed here is still a position by the time you read this. A stock appearing on the Focus List is not a signal to buy and hold. It is a setup we are watching with a defined risk plan. If you cannot define your risk and honor your stop, do not take the trade.

Let’s get into it.

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Reading wasn’t really my thing before I started trading. Outside of books about sports, non-fiction didn’t interest me much.

Then I got into the business, and I figured out pretty fast that reading is basically the second job. The first thing you do is trade. The second thing you do, if you’re serious, is read about trading. Everybody at the firm talked about books like they were scripture.

So I read them. How To Make Money in Stocks. Reminiscences of a Stock Operator. The classics.

But the one everybody pointed to, the one that came up in every conversation, was Market Wizards.

Here’s my confession about the original Market Wizards: I didn’t know how to read it.

Every chapter was a different trader running a completely different strategy. One guy swears by one thing, the next guy does the opposite and also made a fortune. As a beginner that was confusing to me. I kept trying to find THE answer and the book refused to give me one.

It took years before I understood the assignment. You’re not supposed to copy any single one of them. You’re supposed to pull nuggets. Take the best of what each person figured out and see which pieces fit you. The book only made sense once I had enough screen time to recognize myself in the war stories.

So when Jack Schwager and George Coyle put out Market Wizards: The Next Generation, I pre-ordered immediately.

This one is different for me, and the reason is simple. These are my guys.

The traders in this edition are my generation. Same age, same markets, same war stories. They have battle scars from the same years I do. When they talk about getting humbled, they’re talking about the exact tape I was trading. That hits differently than reading about a legend from the 1980s.

The chapter that stopped me cold was the first one, Kristjan Kullamagi. The way I see him, he’s the next thread coming off William O’Neil and Dan Zanger. Growth, breakouts, momentum. Same DNA, new generation. That’s a chapter I’ll reread over and over again.

I took notes the whole way through. Five things kept showing up, across different traders running different systems. Those are the five worth your time.

1. Cut your losses quickly. And then cut them quicker than that.

You’ve heard this a thousand times. I’ve heard it a thousand times. It’s the first skill you build and the most important one you’ll ever have, and it’s still the rule most people can’t actually follow.

So the takeaway for me wasn’t the rule itself. It was how violently aggressive these traders are about it.

A few of them won’t even wait for a stop. If the trade isn’t working right away, they’re out. Not down 8%. Just not working. Gone.

Peter Brandt, in an earlier edition, talked about closing any losing trade before the weekend, and that one made it straight into my core rules years ago. But this generation takes it further. Some of them want the trade to pay immediately or they walk.

There’s something almost snobby about it, and I mean that as a compliment. You’re treating gains like an entitlement. You bought strength, so the strength better show up now. If it doesn’t, the trade already told you the answer. You’re playing defense first and you’re only willing to hold the names that prove themselves on day one.

2. Gamers make kickass traders.

This one’s my favorite, and it’s a little funny.

A bunch of the wizards in this edition play video games. And more than one of them draws a direct line between gaming and trading. The hand-eye speed. The competitiveness. The pattern recognition under pressure.

I grew up on this. PvP gaming, Xbox Live, that specific wiring where you’re reading an opponent in real time and reacting faster than you can consciously think. I always quietly saw the market as a video game. Same feedback loops, same instinct layer built on top of thousands of reps.

To hear some of the best to ever do it make the exact same connection was validating in a way I didn’t expect. Turns out the thing I thought was a distraction growing up was training.

3. Bad sizing is what actually kills you.

This is the one I needed to read, because position sizing has been my Achilles heel.

When I was at O’Neil, everyone wanted to be like Bill. I remember his son Scott coming out to the floor and telling us the firm was something like 200% long Tesla at one point. Aggressive beyond anything I’d heard. It made a permanent impression. I walked away thinking that’s how you make real money. Get the leader right, then press it hard.

And it worked. I’ve had triple-digit years sizing like that.

But here’s what this book made me sit with. The traders who last are obsessed with size, and a lot of them size down, not up. Some adjust position size based on the quality of the setup. The recurring theme is that getting big is the easy part. Holding the position through a drawdown from the top, without getting shaken out, is what separates the pros.

When you run the math honestly, a 25 to 30% position I can actually hold through the noise beats a 100%+ position that throws me out at the first scary day. Time and compounding do more work than leverage, and they let me stay in for the bigger move. The size that lets you sleep is the size that lets you hold.

4. You can’t impose your will on the market.

One of the wizards said this and it’s been rattling around my head since.

This is patience, really. The discipline to sit and wait for your best setup instead of forcing action. Kullamagi talks about how much he struggles with this, because he loves to trade and sometimes overtrades just to be in the action. That’s me. The hardest thing some days is not trading.

His fix is brilliant in its self-awareness. When he knows a setup isn’t his best, he sizes it small, because he knows he can’t fully stop himself from taking it. So he manages the trader instead of pretending the trader is someone he’s not.

Simon Russo framed the same idea a different way: be reactive, not predictive. Don’t force your opinion into the trade. React to what the market is actually doing. That might be the single healthiest way to hold the market in your head.

5. Focus on your process. Then have the discipline to follow it.

Across the whole book, the wizards are process-driven, not outcome-driven. They’re constantly innovating, reshaping their rules to fit changing markets and their own growth as traders.

But here’s the part that’s easy to miss. They follow the rules.

You hear it again and again. They have rules, they break them, they pay for it, they write new rules. Bill was the king of this. Watch his interviews and it’s just rules, rules, rules. Nobody wants to hear that. It’s not the fun part. The fun part is the setup and the run when you’re green.

The boring part is watching a trade you don’t own run without you because it didn’t meet your criteria. Sitting out a tape that doesn’t fit your conditions. That discipline is wildly underrated and brutally hard, because the market is a moving psychological target that never stops testing you.

Which brings me to the thing that actually changed my trading this year.

I physically write my rules down now. My own rules.

Most people start the way I started, by adopting someone else’s rule set wholesale. I bought How To Make Money in Stocks and decided that was my system, word for word. And that’s a fine place to start. But you don’t see real improvement until you stop borrowing rules and start molding them to fit you. Your tendencies. Your weaknesses. The specific ways you trip yourself up.

This book is full of traders who figured that out. That’s the meta-lesson hiding inside all five takeaways.

Final word.

This might be my favorite book in the series. Not because it’s better written than the originals, but because these are my people. We came up on the same stuff. We carry scars from the same years. 2022 was the year I mentally blew up. I didn’t lose the whole account, but I took a huge drawdown and something broke in my head that took a long time to rebuild. Reading other people describe their worst drawdowns, and what they pulled out of them, is the kind of thing that makes a trading book worth more than its setups.

Read the whole thing. But if you only read one chapter, read the first one. Kullamagi. There’s a generation of wisdom packed into it.

I have it on audio too. I’ll be going back through it more than once.

I write Ghost Alpha to document one trader’s real journey, scars included. If you want the trades, the rules, and the lessons in real time, subscribe and come along.

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This is what we are covering this week.

Market Pulse. A read on the Nasdaq bouncing off its 10-week line after a brutal 4.2% down day, why we are forecasting chop, and how that changes where we buy.

The Focus List. Eight names this week. Six we are holding, three more we are watching. Charts, commentary, and the levels that matter for each one. Current holdings are tagged. The rest are setups we are watching.

Quick reminder before we get into it. Nothing in here is financial advice. This is one trader’s read on the tape and the names worth watching. Do your own research, manage your own risk, and never trade money you cannot afford to lose.

How we trade these names. Every name in here is traded the same way, and you should understand the rules before you act on a single one of them. We use a 5 to 7 percent stop from our entry, no exceptions. We know where we are getting out before we get in, and we set the stop the moment we buy. We manage risk first and chase gains second. Our entire edge is taking losses quickly and letting winners run, which means we are often out of a name fast when it does not work. Do not assume any name listed here is still a position by the time you read this. A stock appearing on the Focus List is not a signal to buy and hold. It is a setup we are watching with a defined risk plan. If you cannot define your risk and honor your stop, do not take the trade.

Let’s get into it.

Read more