Everything You Need To Know About What Happened In Tech Stocks This Week (*)
(*) almost everything anyway. Also, How To Be More Like Big Money And Less Like Chad.
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Number Go Up, Everyone Unhappy
by Alex King
Know what kind of markets people hate? Bear markets. Know what kind of markets people hate even more than bear markets? Bull markets.
People hate bear markets because if poorly handled, they make you poorer.
People hate bull markets because they got scared by the bear market, took their money out and put it safe in the closet, only to see market bigs bid everything up again just as they had told everyone it wasn’t safe to go back into the market.
Then the good people of Normalsville, USA put their money back in the market, usually late in the day. Aaaaaand then the bigs take their money out of the market. And then here comes a bear market. At which point we refer you to paragraph one, above.
This cycle isn’t the exception, it’s the rule. It’s not the case that the bear market of 2022 was rational and reasonable because inflation and rates, but the 2023 bull market has been irrational and unreasonable because … well because of whatever baloney people say was the fake reason for the number to go up. Markets go up, down, and up again. And markets - meaning the largest market participants - will take your money off of you at every turn if you let them. That is the basic and core function of the market - a money transfer machine to take money from market smalls and give it to market bigs. And it works brilliantly!
In all our work here at Cestrian Capital Research, Inc, we run to one prime directive:
Try To Be More Like Big Money, And Less Like Chad.
This sounds hard, but it isn’t really. It takes discipline and in particular it requires you to ignore most all the financial media (which is in thrall to market bigs) and learn to do your own work. Fortunately, there are some wonderful tools available for free and almost-free that enable you to follow Big Money around rather easily. The first and foremost tool you need in your quest to be more like Larry Fink is a stock chart.
Not just any stock chart.
You want a chart which tells you these things.
Price levels over time.
The volume of stock traded at any particular price level.
A way to measure the ups- and downs- of price movement to spot likely reversal zones.
A pattern-recognition method within which to observe those price movements.
All our stock charts use the same method. We’re looking for stocks or ETFs that are moving sideways in a price range, at high volume in that range, at local lows. That is likely to be institutional accumulation. Stocks or ETFs that we believe to be under accumulation by Big Money, we rate at Accumulate.
Then we look for those names that have been under accumulation, and measure the up moves thereafter. This is the Markup Zone. It’s where late money comes to buy the thing, thus marking up the stock in Big Money’s account, without Big Money having to do anything. Free money - yay! These names we rate at Hold.
Then we look for names going sideways at high volume in a rangebound manner at local highs. This is likely to be institutional distribution. And these names we rate at Distribute.
You see? Watch Big Money, and follow them around a couple steps behind. Never in front of them - the bigs can crush you and not even notice you’re gone. Always a couple steps behind.
We write more about the method elsewhere - take a look here if you’re interested.
This week a slew of tech names reported. Some we have rated at Accumulate, some at Hold, none at Distribute right now. Let’s take a look below at our views on Salesforce (CRM), Okta (OKTA), and Snowflake (SNOW). The earnings analysis, ratings, stock charts and price outlooks are for our paying members here only. If you’re a Premium or a Pro member here, just scroll on down. If you’ve yet to become a paying member, now’s the chance you have been, er, looking for? Sign up right from these links.