From Compression Comes Expansion
The money printer setup.
First, wow.
What. A. Market.
Over the past week, I notified subscribers in real time that I took on four new positions. Three of which are in the space theme:
4/10: LUNR
4/13: RDW
4/15: RKLB
At this point, LUNR is up almost 25%, RDW is up 15%, and RKLB is up 15%.
This was all part of the plan.
Last week, I published my SpaceX IPO Playbook where I discussed exactly what my plan is for the SpaceX IPO, how I planned to play the potential run up into the event, and much more. You can find it here. I think we executed this plan pretty well up to this point…
The goal of this Substack is not only to create timeless content, but also timely content. I want to give you information and ideas you can act on today like the SpaceX IPO Playbook, while also building a library of content like this article that you can come back to and learn from over time.
Now, for the current article.
You’ve all probably heard me say this over and over again…
From compression comes expansion.
From compression comes expansion simply means that when a stock spends time moving sideways in a tight range building structure and working through supply, it’s often preparing for a big move.
As volatility contracts and price tightens, buyers and sellers move closer to equilibrium. The weak hands get shaken out and supply gets absorbed by those buyers.
As a result, pressure builds. Think of it like a volcano.
For a long time nothing happens. Beneath the surface pressure is building. You can’t see it day to day and it’s boring watching a volcano do nothing.
Then eventually something gives and when it does it doesn’t happen slowly. The pressure releases all at once, and an explosion/eruption happens.
You could also think of it like a spring being compressed. The more it coils and tightens the more energy it stores. At some point it can’t compress any further and when it releases it does so quickly and with force.
Price behaves the same way. The longer and tighter the base, the more powerful the move tends to be once it breaks.
After the explosion in the indices the past few weeks, it would make sense to see a breather, pause, or small pullback.
This is the exact moment when these types of setups start to form. We’ve had a monster move up in so many names, we’re likely going to see some consolidation. And this is where big money can be made.
Of course, I’m going to be stalking setups like this and relaying them all to you in the weeks and months ahead.
In case you missed it, I’ve published four very important and timely articles.
The methodology and ideology in these four articles is what led me to buy stocks over the last few weeks, before the big moves in the indices. I strongly suggest reading these if you have a chance.
I think these are four of my best and most important articles I’ve written since starting this Substack.
In the remainder of this article I’m going to discuss my money printing setup more in depth along with annotated charts + examples, how you can enter these setups before the breakout, managing a compression, and more.
This is my favorite setup, and many of my biggest trades have come from this type of chart. Over the next few weeks, I expect we’ll start to see many of these setups form which will create major opportunity.
And we’ll be ready to capitalize, as we already have over the past few weeks.