🟨 STEM Update - CAUTIONUpdate on the current environment - Orange
The market has never gotten into an easy dollar environment according to the STEM model! Do not judge the market hostility based on what indexes are doing - this is simply WRONG, if you follow the Breakout methodology taught by Mark Minervini, William O'Neil, CANSLIM investors, Gil Morales and the likes. Currently, the market is 🟨 Orange this means selective or highly rotational, signalling a need for caution.
Performance Indicator 💼
Instead look at you own performance of last 5 trades and level of stress are good indicators of the current trading environment. In an "easy dollar" market, stocks move up easily and profits come without much stress. However, over the past year, protecting profits has become increasingly important.
Here are some additional notes I have written earlier that would help you understand the methodology better:
22MAR23: For traders, it is crucial to manage risk diligently in this environment, as it can become a trap of 'death by a thousand cuts.
26JAN23: The times when the general market is directionless (like now) and the individual names are breaking out - is the first sign that we will likely tranition to an easy dollar environment - this is why we want to gauge how is the watchlist doing.
28DEC22: Yesterday, we had some coal names that tried to move and I was close to alerting them but as I was expecting they reversed and closed near lows. While in a good market this is not a problem, we are not seeing any evidence that we have moved away from the 'hard penny' environment.
If you want to learn more about the methodology - make sure you read the description here:
