Why Major Stock Market Trends are so Profitable

The month was March and the year was 2009, that’s when I joined Twitter and started to post up stocks making strong price and volume moves to the up-side during the newly established up-trend. The up-trend or bull market as some like to call it began in March 2009 (I joined 3/31/09 but have been blogging since January 2005).

From March to August, I posted up 56 stock positions that I liked on the buy side (Note: several stocks made multiple tweets at multiple prices and different dates so their tickers do repeat).

Of those 56 stock positions, 44 of them are still showing a profit, nearly two years after the start of the new bull market. This observation is based purely on a buy and hold scenario (clearly not the way I trade or recommend anyone to trade). However, for purposes of this blog post, we will use the “simplest” form of explanation to drive home the powerful point of buying and selling with the major market trend.

The best performer was CXO, listed multiple times from April to August with a top gain of 282% (as of the close on Friday, March 25, 2011). CXO was targeted as it traded in the $27 range and then again in the low to mid $30’s; it closed Friday at $105.86. In total, 14 stocks are currently showing a gain of 100% or more with six of the positions larger than 200%.

The 200%+ tickers include: $CXO, $RAX, $VMW, $ARST
The 100%+ tickers include: $MELI, $RVBD, $HMIN

Note: ARST was bought by HPQ for the share prices used in this blog ($43.50 from $16.96) .

On the flip side, 12 stocks are currently showing a loss with FRPT leading the way, down over 30% from $7.09 to $4.96. Please note that several of the “losing stocks” listed went on to make gains of 5%, 10% or 20% but then collapsed. For example, CISG went from $18.25 to a high of $28.33 before closing Friday at $13.54, showing a 26% loss. But, the “buy and hold” hypothetical scenario will cancel out the true losses from the true gains (not all winners would have been held the full two years for maximum gain).

To recap:

  • 56 Total Stocks Profiled (March to August 2009 – following new up-trend)
  • 44 Stocks showing a gain
  • 12 Stocks showing a loss
  • Average gain is 76% (44 total positions)
  • Average loss is 12% (12 total positions)
  • The win-loss ratio is 78.6% (winners)
  • The largest gain is 282% ($CXO)
  • The largest loss is 30% ($FRPT)

Please note that “true” buy and sell rules would have closed out many of these actual positions as they took 5%-8%+ losses and the winners may have been closed on pullbacks of 15% or more. A pure buy and hold scenario would give you a 57% gain (as of today), buying $1,000 worth of shares in each of the 56 positions.

The point of the post is to show how STRONG and LONG LASTING a MAJOR TREND REVERSAL is in the market. The major trends can last for years before fizzling out, trading sideways and then starting a new trend or reversing in the opposite direction. I didn’t starting showing the possible trades in early March which was the ultimate bottom and I can’t tell you when the “ultimate top” will be but pay attention, this up-trend is in a late stage (vulnerable).

A major market reversal has NOT been confirmed but keep a close eye on your positions. If we move higher, hold tight and even add shares where warranted but start to sell when the NH-NL Ratio confirms any clear distribution and downward movement by the major indicies such as the $INDU or $COMPQ (price and volume).

I am not a buy and hold investor but you can clearly see the huge gains that strong (and young) growth stocks can give to your portfolio – just by spotting a major trend formation. Ride the trend, it’s that simple!

Enjoy and stay tuned as we watch quietly, carefully and patiently for any potential trend reversals.

My complete 2009 stock list (March to August) is below:

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