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Before you Trade Today: Know the Economic Calendar! Also See This Weeks Most Anticipated Earnings (Note: Red on the Earnings Calendar Indicates an Earnings Loss [Not Miss] Consensus), & Yesterdays Insider Buys. NEVER BE SURPRISED BY EASILY ANTICIPATED MARKET BREAKING NEWS. That’s our goal here.

MOST RECENT INSIDER BUYING

TODAYS COMMENTARY Get a Cup of Coffee & Enjoy Catching Up! If you aren’t reading this daily you are missing out on a wealth of information that could prevent unforced & unnecessary trading errors.

WHAT STOCKS TO BUY?: There are a number of things you will want to consider in addition to the following. But here are some of the major attributes you will want to look for.

• Reliably Profitable Companies: Companies that are registering a profit & will likely register a profit regardless of economic conditions.

• Companies w/ Pricing Power: Meaning the company can raise prices as necessary & the price elasticity of demand remains relatively inelastic. In layman’s terms, companies that can rise prices without a significant reduction in demand.

• Companies that can Survive a Recession: Companies that will enjoy profitable demand through a prolonged period of negative GDP growth.

• Trading at, Close to, or Below, Book Value: This is perhaps the most important criteria. Generally, so as long as a company is trading at or near book value, (the value of the company if it were to be bought out or liquidated), any additional EPS typically adds to the book value … & thereby the value of the company/stock. Be careful! Many companies trade close to book value because they’re expected to do poorly in the future. And yes, profitable companies CAN trade below book value in bear market conditions. Trading profitable companies around book value provides cushion from downside & typically results in quick turnarounds in share price as sentiment improves. Fundamentals matter in bear markets … don’t forget that!

• In an Industry/Sector with a Solid Economic Outlook: Kind of self explanatory ... yet tough, in an inflationary environment. After all, the last time inflation was this high was 40 years ago.

NOTE: I am looking at adding to the BUY LIST at these lows … but I want to convey the importance of a conservative strategy & leave room to demonstrate averaging down & using options to limit risk.

HOW TO BUY:

• Keep Cash to the Side: It’s important to have the ability to lower your cost basis. I think there is much more downside in this market.

• Buy in Slow: Average down every 10-15% or so. Build your positions, don’t simply throw money at a company & expect instant returns. Also resist the urge to average down at less than 10%. Trust me, you will want to … & trust me … it can still go lower. So figure out how much exposure you want to a particular stock in your portfolio, & buy it in pieces … & when you’re up to the size you want … keep the equivalent amount of cash to the side (As the value of the position). Don’t think you will profit well using this strategy? During the early COVID days this strategy reliably netted me 10% a month & roughly 140% in the year 2020. I’m not promising similar results in this market. But I think it’s a great way to handle business in this market.

• Sell Calls: While you are waiting for your position to flip, consider selling calls against your shares. This is not a risky proposition. It can often be done simultaneously as you purchase the lot. I have a video on how to do this HERE. Remember, when you sell calls against your position, that money enters into your account instantly. You can then turn around & buy more shares with the proceeds when the price drops.

• Consider Selling CSP’s: I have a video on this HERE. If you aren’t assigned you can make a profit. In some cases you can work it where you can be assigned at a bargain. If you are assigned you can then turn around & sell calls against the underlying. The proceeds thereof can be used to purchase more shares. The CSP strategy affords you the opportunity to buy in lower than current trading value.

• Other Factors: High cash, low debt, good cashflow, reliably secure dividends, a solid current ratio, low forward PE (relative to the industry), a low PEG ratio (relative to the industry), solid profit margin … & more.

EXPECTATIONS: Don’t ever expect things to go as planned. They won’t. Even if the company you’re invested in is doing great, & will continue to do so, selling pressure amid bearish sentiment will still drag it down. Remember that many companies are included in very large ETF’s, & such exposure can really screw with the price action. Additionally bearish sentiment can lead to low volume & low liquidity … meaning larger than expected jumps or declines in share price over the course of the trading day. Remember there are plenty of items that can still drag this market down. (Many of which were explained in yesterdays newsletter).

NEXT BIG ECONOMIC NUMBERS:

• Retail Sales 0830ET Tuesday 17th MAY: Consensus +0.7%

• Housing Starts & Building Permits 0830ET Wednesday 18th May: Consensus 1.783m/1.813m respectively.

• Existing Home Sales 1000ET Thursday 19th MAY: Consensus 5.56m

Significant News Heading into 05.13.2022:

• Stock futures jump as S&P 500 looks to avoid bear market

• European stocks climb as global markets look for rebound

• Japan’s Nikkei 225 jumps more than 2% as Asia markets rise; SoftBank shares surge

• Powell says he can’t guarantee a ‘soft landing’ as the Fed looks to control inflation

• U.S. to boost baby formula imports to ease nationwide shortage after Abbott Nutrition recall

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PAID CONTENT IN THE PAYWALL BELOW:

• 3 Stocks near/at/above the Buy Zone (Waiting to Swing).

• 2 Options Strategies

• 26 Stocks on the Price Based Assessment Watchlist 5 Stocks on the Stocks Under $20 List (Read the Warning/Disclaimer) 6 Stocks on the Highly Speculative Highly Volatile Small Cap List (Read the Warning/Disclaimer) 4 Stocks on the short possibilities list

• A Detailed Breakdown of Yesterdays Earnings Beats & Misses

👉CLICK HERE TO SEE THE DETAILS OF EVERY STOCK ON THE BUY LIST (AND SEE THE PRICE ASSESSMENT BASED WATCHLIST / THE STOCKS UNDER $20 LIST & THE HIGHLY SPECULATIVE LIST)

LOGIN INSTRUCTIONS: You will need to login to see the detailed list. The “email login link” will send the link to login directly to your inbox (Click the link & it will automatically log you in). You can also choose the “login with password” option. You will need to set up a substack password for this option.

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