Top 7 Lessons from Qullamaggie's 18–23 May 2023 Streams
Loads of EP opportunities, breakout conditions, market filters, homework, relative strength, themes and the small account edge
We’ve recently been treated to an incredible amount of wisdom from Qullamaggie — so much so, I thought I’d write up a summary on what I think are the top 7 takeaways or lessons from the 18–23 May 2023 streams.
Let me know in the comments below or via Twitter if you want more posts like this!
1. Opportunities galore, especially EPs
There’s so much bearishness out there, but the reality is that there’s been an incredible amount of opportunity across a range of industries and market caps in terms of EPs of late, especially during May. Focus on price and volume; forget the news. We’re seeing a significant character change in the market, with speculation money starting to return and stocks starting to make big moves on volume.
EP examples from May alone include: ACVA, AI, AIRS, APLD, APP, CELH, DDOG, ENVB, EVLV, FUBO, IMGN, KRYS, LI, LMND, MNDY, NNOX, PLTR, POWL, PRTA, QBTS, SHOP, SMCI, UBER, USGO, ZS.
My 18 May stream notes explain EPs in more detail and how to enter them.
2. Breakouts haven’t been working
Since November 2021, breakouts have been failing. They rarely have follow-through. How come? Well, you need an uptrending market for that, whereas we’re currently in a range-bound market, and have just experienced a bear market.
Furthermore, breakouts work best in small and mid caps, and small caps in particular have been essentially dead.
The lesson? Well, to quote from the 23 May stream notes:
“Because we haven’t had breakout conditions, you need to adapt. But once classic breakouts, HTFs, etc. start working again, they’re going to be money printing machines.”
3. Use a “market filter”
Linked to the previous takeaway, having the right market environment for how you trade is clearly important. You can use e.g. $QQQ to determine a traffic light system on how aggressive you should be, looking at things like whether the 10 EMA is above the 20 EMA, and whether the moving averages are trending up. To borrow Mark Minervini’s phrases, know when you are in an ‘easy dollar’ or a ‘hard penny’ environment.
My 18 May stream notes discuss this further.
4. Do your homework
If you want to figure out what’s been working of late, so you know what to look for, scan for stocks that:
Made a big move in a short space of time; and
Made that move (relatively) recently; and
Are liquid enough for you to trade — you never want to be >1% of the average daily volume.
My 18 May stream notes go into more detail on the scan to use in TC2000.
This approach is also great for finding and studying EPs. If you want to master that (or any other) setup, you’ll need to find hundreds, if not thousands, of charts with that setup and study them. Points 1 and 3 still apply, but you need to go back further — at least five years back to make sure you cover all different market conditions.
5. Find relative strength
Leaders lead. They show relative strength. They make higher lows when the rest of the market retests the lows, break out before everyone else, hold up when the rest of the group breaks down, etc. These are the stocks you want to identify and get into.
For example, compare the two charts below. See how much better $NVDA acted compared to the $QQQ over the same period?
My 19 May stream notes discuss this further.
6. Understand the theme
When theme stocks go, they go. When a few start to move, the rest tends to follow, and particularly the early movers can make enormous gains in very short spaces of time. But to be able to take advantage of that, you need to understand what the stock’s theme is, as well as what themes are hotting up.
For example, Kristjan mentioned on a few recent streams how AI and quantum computing stocks are waking up, and that software, semiconductors and biotech names are looking good (which are all industries that link to AI and quantum).
And the more fundamental research, including understanding exactly what the company does? Leave that to the funds, and just follow the footprints they leave — massive volume and relative strength. More on that in my 19 May stream notes.
7. “Piece of s**t stocks go up the most”
For all the classic wisdom from people like William J. O’Neil (an inspiration to many traders who has sadly recently passed — R.I.P.) about following the funds and paying attention to earnings, the biggest movers — in the sense of the largest % gains in just a few sessions — are “piece of s**t” stocks. Stocks with no earnings or institutional support. But those stocks are almost always super illiquid, which is why Kristjan is always saying “small account edge!”
Just be aware that these stocks come down pretty hard too, so be sure to trim your position as the stock explodes.
More Qullamaggie notes
All my Qullamaggie notes, including stream notes, are available here.
The stream notes this stack is based on are:
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More about Qullamaggie
To learn more about Kristjan Kullamägi, aka Qullamaggie, and the way he trades, visit his website.
All past streams are available on Kristjan’s YouTube channel.
Really great service that you are offering with this Substack, Kay - keep up the great work. It's clear, informative and explains his streams and style of trading very well. Very educational and an enjoyable read .