'Good' and 'Bad' Charts Help Us Stay Rational

In today's Masters Series, originally from the July 29 Weekly Market Outlook issue, Greg details how you can maintain a rational mindset throughout this up-and-down market... [Stansberry Research Logo] Delivering World-Class Financial Research Since 1999 [Stansberry Master Series] Editor's note: [Keep calm in this volatile market](... During roller-coaster markets, like the one we're experiencing right now, many investors get scared and don't stick to their investment strategies. But according to Ten Stock Trader editor Greg Diamond, failing to keep your emotions in check can lead to devastating results for your portfolio. In today's Masters Series, originally from the July 29 Weekly Market Outlook issue, Greg details how you can maintain a rational mindset throughout this up-and-down market... --------------------------------------------------------------- 'Good' and 'Bad' Charts Help Us Stay Rational By Greg Diamond, editor, Ten Stock Trader When asked to define a great trader, Bruce Kovner – featured in Jack Schwager's Market Wizards – had two things to say... First, he has an open mind about what's possible in the markets. And second, he's rational and disciplined under pressure. This also describes how I approach technical trading... In Ten Stock Trader, I often write about the importance of keeping an open mind and running through different scenarios. The key is to remove any permanent bias you may have about the market... It doesn't matter what investors might want a market to do. We need to focus on what the market is actually doing... and likely to do. But many folks get caught up in the fear... Every time we go through a round of volatility, they call for the end of the world. I've seen this a lot recently on social media platform X. The bias of bearish investors is overwhelming... They constantly talk about a 1929-style market crash and another Great Depression. (My X handle is @DiamondTrader10, if you want to follow along.) But these investors don't have an open mind, and they aren't rational, which Kovner urges us to be. Ultimately, permanent biases can cost you dearly. So today, I'll outline how we can maintain a rational perspective... when looking at both "good" charts and "bad" charts in today's bull market. --------------------------------------------------------------- Recommended Link: [This Could Be the End of Kamala Harris]( Beginning around September 9, the "October Surprise" that precedes presidential elections could come early... upend the election... and open a historic investment opportunity. If you know what's coming, you could double your money 10 times, as we showed during the 2020 election year. [Click here to learn more](. --------------------------------------------------------------- The big question is... How can we stay calm through all the recent ups and downs? The simple answer is, we can look at weekly price charts... They help us pinpoint the actual "damage" – what's really happening to a trend – after a round of volatility. You see, weekly charts aren't as "intense" as daily charts, which provide minute-by-minute price action. Weekly charts offer a broader perspective, which helps us stay rational amid the volatility. Let's start with the "good" charts. Here's a weekly price chart for the Technology Select Sector SPDR Fund (XLK), which tracks the overall technology sector. (I outlined this chart last week using a daily time frame.) There isn't a lot going on here, but that's the point. It's a simple weekly chart... The black dashed lines above show us that the uptrend is still intact. Now look at the relative strength index ("RSI") at the bottom of the chart. I've outlined a positive RSI reversal with the blue line and red circles. This is a bullish setup, and the weekly time frame offers a positive message for investors... Despite the volatility and calls for a market crash, weekly charts show us that things aren't as bad as some investors believe... This helps keep us rational. We can see the strong uptrend in the tech sector via XLK. Shifting gears to the semiconductor sector... It's no secret that the artificial-intelligence boom has fueled the rally in semiconductor stocks over the past couple of years. Leading chipmaker Nvidia (NVDA) is on everyone's radar. I outlined the technical setup in this behemoth last month. The stock still has a bullish setup as far as I can tell. Now let's review two underperforming stocks in this sector. The first one I'm looking at is Micron Technology (MU)... Unlike XLK, MU has broken its uptrend... The stock is down more than 30% from its June 20 high. (If you recall, that's a Gann time factor.) You can also see that the RSI is near oversold levels. (I'll discuss what this means in a second.) It's highly unlikely that MU makes a new high with the other "good charts," like XLK. A lower high into the time factor window signals more volatility ahead. Advanced Micro Devices (AMD) is another semiconductor stock I've discussed a lot recently, and its "bad" chart is worth outlining... As you can see, AMD has a big problem... The "C" wave formed a massive lower high from the March 8 top earlier this year. The stock also made a new swing low a few weeks ago, as labeled with the red arrow. Simply put, this isn't a bullish setup. And like MU, the RSI on AMD is oversold. So, what does all this mean? Here's how I see things playing out... The setups in XLK and NVDA are likely to climb higher. The uptrends in these "good" charts are intact, and we have bullish setups on the RSIs. MU and AMD – the "bad" charts – don't have long-term bullish setups. But they're likely to have significant bounces given the oversold RSI levels. If I'm correct about the next inflection point in late August/early September (based on my cycle work), we're likely to see new highs in the "good" charts... and much lower highs in the "bad" charts. And if that happens, we'll see volatility explode heading into the last few months of the year. For now, I'm staying rational and following the trend in the markets that haven't yet broken down. Best, Greg Diamond, CMT --------------------------------------------------------------- Editor's note: Greg is no stranger to staying rational during difficult times. He called the 2020 and 2022 market crashes. Now, he's sounding the alarm with another urgent warning... He says a massive market move will hit around September 9. It could decide the U.S. presidential election... and open up the biggest moneymaking opportunity of 2024. Greg is going on camera on Tuesday to reveal how you can prepare for this historic turning point. [Learn more here](... --------------------------------------------------------------- Recommended Link: [Our No. 1 Stock for the Rare 'Millionaire Window' Opening NOW]( According to Wall Street legend Whitney Tilson, an extremely rare window in the markets is about to open. It's an often misunderstood market setup we've only seen 13 times since 1920. The last time this happened, it minted a million brand-new millionaires – in a single year. But Tilson says this unique window in the markets could close much sooner than anyone realizes, leaving most investors in the dust, while making a select few incredibly rich. [Get our No. 1 stock (with 500%-plus upside potential) for this rare market event now](. --------------------------------------------------------------- You have received this e-mail as part of your subscription to Stansberry Digest. If you no longer want to receive e-mails from Stansberry Digest [click here](. Published by Stansberry Research. You’re receiving this e-mail at {EMAIL}. Stansberry Research welcomes comments or suggestions at feedback@stansberryresearch.com. This address is for feedback only. For questions about your account or to speak with customer service, call 888-261-2693 (U.S.) or 443-839-0986 (international) Monday-Friday, 9 a.m.-5 p.m. Eastern time. Or e-mail info@stansberryresearch.com. Please note: The law prohibits us from giving personalized financial advice. © 2024 Stansberry Research. All rights reserved. Any reproduction, copying, or redistribution, in whole or in part, is prohibited without written permission from Stansberry Research, 1125 N Charles St, Baltimore, MD 21201 or [stansberryresearch.com](. Any brokers mentioned constitute a partial list of available brokers and is for your information only. Stansberry Research does not recommend or endorse any brokers, dealers, or investment advisors. Stansberry Research forbids its writers from having a financial interest in any security they recommend to our subscribers. All employees of Stansberry Research (and affiliated companies) must wait 24 hours after an investment recommendation is published online – or 72 hours after a direct mail publication is sent – before acting on that recommendation. This work is based on SEC filings, current events, interviews, corporate press releases, and what we've learned as financial journalists. It may contain errors, and you shouldn't make any investment decision based solely on what you read here. It's your money and your responsibility.