Investors usually fall into two categories: long-term buy-and-hold investors, who behave like owners of the business and day traders who have no loyalty whatsoever. I am interested in another strategy, which is long-term trading. The aim is to hold the shares through periods of positive price action and step aside at other times. This may not be as profitable as buy-and-hold with top performers, but it can be easier to handle for investors who are freaked out by significant declines.
This strategy will not work, and indeed, no strategy will work with a share that is spending years, even decades, trading sideways. The company must be successful; the more successful, the better. Applovin has exciting fundamentals and is growing so fast that many investors are sceptical of the performance, the story and the prospects. You believe, or you don’t.
A red line strategy would have bought the shares in April 2023 and would have held them ever since. The problem with this strategy is that the story is much better understood now than it was back then. So how did we spot it in the first place? We are working on solutions to that problem.
The yellow line has been slightly more active with two sell signals and two buy signals, and presently, you would not be holding the shares. I am increasingly thinking that green signals from the shortest moving average are too frequent and not especially useful, but I am still brooding about that one.
As a point of interest Applovin, Nvidia, Palantir, Credo International and many other exciting shares are waiting for yellow line buy signals. A red line investor would not have sold them. Shades of the buy and die investment strategy.
A falling red line carries the threat of a full-scale bear market, and new investors should only come in on a red line buy signal, i.e., all the moving averages heading higher in unison.
War in the Middle East makes it likely that there are many investors out there looking for safe havens. By the way, I am thrilled that Khameni is dead. No flowers on his grave from me. I am impressed by the way Trump is disposing of the bad guys I especially dislike. Will it end well? I have no idea, but hope springs eternal. Did we do the right thing to get rid of Hitler? Yes, sometimes action is needed.
I don’t think a war is bad news for investors. It is a perfect way to stoke up bottomless demand and put a rocket (pun intended) under technological development. I don’t see it as a war. America and Israel v a leaderless Iran is a bit like Mike Tyson v Woody Allen. New leadership will emerge in Iran, but their obvious strategy is to come to an accommodation with America. Anything else would be madness.
My wildest dream is that somewhere down the line, we are going to see fair elections in Venezuela and Iran, and the good guys will win. It didn’t happen in Iraq, but miracles do happen. Meanwhile, this is a difficult stock market to deal with as AI-driven change comes thick and fast. The charts are helping, and I am keeping a close eye on them.
No question Nvidia, Palantir and Applovin are simmering. Buy signals could be triggered any day.
