so i'm long enph and solaredge sedg solaredge i was able to fortunately buy it um just before
the gap up so like on yeah the day prior i was long from that area and solaredge enphase i
bought on the opening of the earnings gap up and that was the first earnings gap up i've probably
bought in a year so finally you know i i've been watching this sector for the longest time i said
great earnings report beat raise everything was you know an a plus on it so i i decided to
go long on the earnings report and what really stood out to me and you know sometimes we get so
caught up with the market um and worried about the mark going lower and this and that i mean but look
at these stocks end phase i mean the market topped in november end phase bottomed in january and this
has been working its way higher all year so this is really kind of building out like if you look
at a daily or a weekly chart you can see either cup and handle or i see like a kind of a giant
triangle pattern that that was forming and that's just to me that was just yelling out that hey
the market could be as bad as it wants but this company still has great earnings funds are still
accumulating and i think this week's giant gap up i mean to a new all-time highs with this backdrop
not only does the company have great growth prospects i think it's in a great theme there's
obviously more and more money gonna go towards greener uh environments and actually higher oil
prices helps too because the substitution effect right if energy is high all the more benefit to
have solar it actually benefits solar as well and so again sometimes we're so worried about
the market making a lower leg but sometimes you have to kind of step back and say well if the
market even just stabilizes here who could really be that next monster winner because
i know bill was buying like ebay in 2002 and then the market kind of almost made a lower low and 0.3
but that thing was already way higher and then by the time the market turned ebay was up and running
and that's always kind of what happens at these market turns so i think solar is just completely
screaming that this is you know a leading sector now where do you buy obviously the gap ups make
it a little more difficult now that it's up big on the week but nothing nothing is straight up we're
going to pause consolidate come down to an average show even if it's a shorter term average and i'll
be looking to add personally so this is something some people that you know you're so beaten up by a
bear market you want to quickly take a profit but then sometimes you have to hold yourself back and
say oh no this is potentially a big big winner you got to think to add not actually sell and
so it depends your mindset but i think this is just screaming leadership great points there now
uh the end phase one of the things that's kind of was kind of tricky about this is um the volatility
i mean it was you know up seven percent eight percent down seven percent eight percent daily
you know it was just it was it was either up big or down big you know um and for a lot of people
that's maybe hard to kind of get you know put in your risk management properly you know how
you know how do you kind of give it the room that it needs to do its normal movement now i will say
that you know kind of as you mentioned it it was really tightening up it seemed like if you looked
at the weekly chart um the swings were getting smaller you know more recently right before
that breakout but when you're dealing with a very volatile stock and i mean it's really a volatile
industry a lot of the names can be very volatile how do you kind of put put that put that risk in
into perspective well this is kind of the irony of the market right like you know especially you know
mostly ibd centric people we're looking for these big runners you want to make you know 40 50 70
but if the stocks move 10 a day it's still difficult even if you're trying to make a 40
because in one day you can lose 10 but it takes time to make 40. but if you bring up so end phase
i bought on the gap up because it just clearly in my opinion the earnings were great it was already
a leader and we kind of cleared all of that resistance it was just you know i said this is the
low risk opportunity where if it fails it's over but if it works it's gonna the resistance is gone
but um that was the gap up the reason i bought sedge before the gap up which maybe is a better
uh discussion you know apart from this kind of gap up area if you look at sedge at each of those
rallies that you were talking about i've been watching this i was watching that same trend line
which i didn't buy on the initial trendline break but if you look at every time it kind of rallied
to that line within three days it had given back almost the entire prior advance i mean it was
fast drops every single time now the last time we got to 300 you went sideways for three days
you didn't you didn't budge and it didn't do that at any other time when it went up to that line so
i said this is the first time we're getting to resistance and we're actually not just falling
apart so given the overall backdrop of the solar how was so strong and the market was strengthening
i actually bought it that day prior to the gap and it closed a little bit lower i said oh we'll see
how it opens tomorrow unfortunately it was a gap my way but at least that little tightening right
at the end and sometimes i know even for looking for big picture stuff that short term tactic to
keep your risk in check is really critical or else like you said it's almost untouchable right you
have these 10 15 percent moves but you sometimes you get those two or three day periods where they
coil up we say look at least if i'm wrong i'll lose you know four or five percent instead of
fifteen percent and that makes all the difference right in my opinion well and and in a certain to
a certain degree it was like almost like a change in character it's like i'm acting differently now
so you said you're looking for a place to add to these what would be the ideal
scenario or look what are you what are you looking for to add that little pink line you
have on the chart is that the 10 day i'm assuming yes yes we have a 10 day simple 21 day exponential
50 and 200. so usually what i i found after these gap ups and especially if your position
before it obviously helps i use usually like an eight exponential instead of it
doesn't really make a difference it's just i think a matter of preference
but after these big gap ups i i've noticed if they gap up a day or two and then kind of just pause
for three four five days it gives it enough time for like the ten to catch up and tag it
and that usually happens especially in these scenarios if you look at uh solar edge and m
phase they both kind of just ran up to their prior all-time highs and right there kind of
stopped and reversed to kind of nail everyone who's kind of late to the game one one more time
yeah you know and uh so i think sometimes if you can see that sideways consolidation
as that 10 comes up that's where i'll be adding to the trade um it's just just uh giving you enough
time for like the short term averages to come up and then how much do you add what what kind
of initial position sizes did you go with with these and then how much would you be adding so
i keep my position sizing the same i know some people if they have a smaller stop and say i'll
go bigger but the problem is like if you trade long enough you'll you know you say oh i got
this one dollar stop but then there's bad news and the gaps down eight dollars and your stop is
meaningless so i my risk side of my my business is always fixed and i'll usually size about a 10
of my account per purchase like i'm a little more aggressive i think people who are less expensive
you can make it five percent or something uh but i usually buy so 10 per purchase so i'll
figure out how many shares that is and and so i have my first buy and after if i get enough of a
move up and i see another entry i'll add another 10 of my account to it and and my average cost
will be somewhere in the middle and and that's how i kind of you know concentrate over time into
the stocks so then if you're fully invested then you just rank your stocks and you know
feed your winners and you know weed the losers or how does that work so when i when i'm paid
yeah when i'm looking at i always like my goal is to say like if it's a good stock and it's working
well i want it to be like 30 of my portfolio so i want to i want to find three ways to buy it and i
have all these kind of short-term tactics like i mentioned on solar edge and i also don't like
having more than like six or seven stocks so once i get to seven stocks which i'm probably in that
position now i have like 10 10 and i'm 70 exposed but as new buys come in and i get on margin i
just naturally start to say well this one hasn't gone anywhere in two weeks or i'm up two percent
or down and i'll sell that and i'll add it to one that's giving me an extra buy and that's the again
the genius of bill o'neil and i know he took some of that from jesse livermore and i think that's
just good practice and that way you're always like any any businessman i know we're looking
at this as as trading but any business person you want to give more money to what's working and take
away from what's not working so i think it's just good practice and that that's how i do it as well
if you won't go down in a bear market and you finally buy it at the right time and you know
it launches up and you say wow it wasn't going down a bear market you bought it right it's up now
any good move is going to take time i remember reading bill's book when i was
like 15 16 all i would look at is 700 percent in 68 weeks or i never looked at the number of weeks
i just looked at the percentage return so yeah you know for a 16 year old like 68 weeks is like an
eternity so i was never able to i wanted i wanted the percentage return but i could never stay in
and i eventually kind of learned to kind of pace myself a little bit but if i have that
relative strength especially in a bear market uh that's why i think in 2020 i had such a good
year because i saw these stocks that wouldn't go down or they were so quick to get to new highs and
there's something that's saying so much about that stock specifically they take a look at end
phase ahead of time this was again showing relative strength off this bottom and really
strong off of this bottom so typically you'll see that develop before the big breakaway move happens
great and so then just a reminder for everyone how you're looking at relative strength um
not just percentage you know directly versus the s p 500 but how much should it be outperforming
based on the stocks beta right yeah so that's what i do so basically you know because if you
just look at it versus the s p only like the fastest moving stocks will ever kind of come up
on the radar and so and sometimes you know those same fast moving stocks will if they are holding
in but they're still falling a lot percentage-wise they won't come up so by kind of basically
weighting the stock not only against the s p but like hey this stock is usually twice as val you
know volatile as the s p so to show relative strength you got to go up more than twice the
s p or if the s p is falling and you're falling the same as the s p that's pretty good because
you should have fallen twice as much as the s p so when you start to wait the stocks move versus
the s p but accounting for volatility i think you get new insights that you wouldn't otherwise get
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