The Ultimate Market Edge
"See the future" and fine tune your process.
I’ve been called a perma bull and everything under the sun due to my bullish bias since the April lows.
We’ve done nothing besides capitalize. But being bullish isn’t an edge…
Every market participant needs an edge.
An edge is the reason you can consistently make money in this game where all market participants are looking at the same charts, reading the same news headlines, reacting to the same price action, trading the same stocks, etc.
It’s the specific way you process information, find trades, manage risk, buy and sell, recognize opportunity, and act while navigating the market.
Without an edge you’re just another person clicking buttons and hoping the market agrees with you.
Some traders have an edge in options flow, swing trading, research, patience, sector + theme identification, day trading, or investing. The best market participants usually combine several of these, but the point is same.
You need something that separates you from the crowd.
For me, that edge comes from watching how headlines, commentary, public comments, disclosures, filings, earnings + fundamentals, and price action all intersect.
I like to connect dots across different pieces of information and look for the signals most people don’t fully understand until they show up in the chart.
My edge ultimately results in being early and spotting things before the masses.
This edge helped me identify and position ahead of the CPU bottleneck before the masses, which I wrote about on 3/26 here. It also helped me spot and position ahead of the next “bottleneck” or “shortage” starting to come alive which I wrote about here.
Everyone is starting to talk about it now, but it’s still very early…
Charts matter, I believe in technicals and use them extensively. But charts are often the finished product. My edge is in noticing the ingredients before the final picture is obvious. I have no problem buying a stock that doesn’t have a perfect chart.
That’s how we bought leaders like MRVL and ARM so much lower than current prices.
Last week, CRCL was below all key moving averages and didn’t look great. Yet I still notified subscribers that I bought, and the next trading day the stock was up 25%.
If you’re not already in the subscriber chat, I strongly suggest paying attention to it.
This is where I post a daily thread with all of my thoughts on the day ahead, relevant headlines and macro events, my main focuses, notable upgrades and downgrades, and much more.
We have tons of smart people sharing ideas throughout the day, it’s a really impressive group. I genuinely think this might be one of the most active subscriber chats on Substack.
This is also where I post new position threads and outline my thesis behind each trade. Come join!
Back to the crux of the article…
There is more to stocks than a chart, if you know what to look for.
Headlines, commentary, and news helps provide the early clues. The opportunity comes from connecting those dots before it’s obvious. By the time everyone else could clearly see the thesis in the price action, the best risk/reward is already behind us.
We get positioned far ahead of the herd so we can sit back and watch fireworks, and my goal with this article is to teach you how to do the same.
I want to quickly mention that I’m planning on making a new long term investment over the next few weeks. I’m still doing some final research, but have narrowed my short list down to a few names.
I don’t make long term investments often, I’ve only made two this year. But when I do, I make them count…
In addition to all of the recent big trades including ARM, DELL, MRVL, CRCL, etc. I’ve alerted subscribers to two long term investments this year.
INTC in the $30s (thesis + alert on the day of purchase here)
RDDT in the $130s (thesis + alert on the day of purchase here)
I don’t just buy anything at any price.
For me to make something a long term investment, I need to see a combination of valuation disconnect, misunderstood upside, improving or exceptional fundamentals, and a major theme + narrative that I believe can compound over time.
I believe I’ve found a few candidates. More on that soon…
In the remainder of this article I’m going to discuss what my market edge actually is, how I connect different pieces of information before they fully show up in the chart, why narratives and fundamentals matter more than most traders realize, how to identify your edge, how I use technicals to confirm ideas, and more.
This is one of my favorite articles I’ve ever written, and I believe it’s going to help you all understand my process on a much deeper level.