The Train Is About To Leave The Station

The Train Is About To Leave The Station

Depending on what you read and on what day you read it, you'd either think we were entering a bear market doomsday or that we have been given a gift in the form of a 10% correction that is begging to be taken advantage of. There's Trump news (when isn't there?), Syria conflict, China trade wars, you name it. There are headlines every day designed to scare you and many are so scared they refuse to add risk and trade the market. With all of this volatile rollercoaster movement, a lot of money left the market, too scared of a potential crash to stay engaged.

February saw the third highest stock outflows on record, and this trend continued in March. This means that investors are taking their money out of the market, opting to sell out of their positions and hold cash. As we noted before, money coming out of the market in this fashion makes it much more difficult for the market to crash, as there isn't enough ownership to cause a serious decline.

3 Reasons To Avoid Spotify Stock

3 Reasons To Avoid Spotify Stock

Tech IPO's have recently had a bit of a hard time getting off the ground, and this trend is sure to continue with a company like Spotify. The current valuation has Spotify coming in at about $24 billion, which is difficult to justify given the company's current financial state. Spotify is very far away from making a profit, and there are a lot of questions about the sustainability of their business.

How To Start Trading Stocks Like A Pro

How To Start Trading Stocks Like A Pro

"I want to get involved in the market. I want to learn about stocks. But where do I start? What do I even buy?"

I've gotten this question a lot, and it's the primary reason I got the idea to start Minotaur Insights in the first place. A lot of people want to get involved, they just lack the basic knowledge to get started. They think they don't have enough money, the stock market is too high, and any other excuse they've read online that convinced them to stay away from the market. 

So where do you start? The answer is different for everyone, depending on the amount they have to invest and their potential to take on risk, but I've put together an attack plan so you can hit the ground running. Let's jump right in.

Minotaur Portfolio Check-Up

For the first time ever, I am going to give you a look under the hood of what makes Minotaur tick, and give you a chance to see what makes up my common stock portfolio. At Minotaur, we value obsessive risk management, position sizing, and diversification, but in order to really understand the values and strategy that we employ, it's best to look at the stocks that we own.

If you'd like to get an alert to your phone every time I buy or sell a stock in my common portfolio, click here.

Below, we will dive into each position that we are currently in. We will analyze each position, cover where it's gone since we purchased, and tell you where we think it's going in the future. We hope you will learn a thing or two.

The Portfolio

We divide our common stock portfolio into three categories: Long term investments, short term investments, and short term trades. The way we determine which stock goes into which category is based on the time frame we are looking at and how long we plan to hold the equity. We will get into each of these separately below.

Long Term Investments

Long term investments are stocks that I plan to hold for over a year. Gains are taxed at a lower percentage if you are able to hold stocks for a year, and consistently growing stocks can be a nice stabilizer in your portfolio. I currently own the following.

X — Full Position —+90%

This stock is my baby, and the initial play that launched me into the materials sector. With a magnificent anticipated increase in infrastructure spending, both domestically and abroad, I had to get some exposure to the companies that would supply this endeavor. I don't plan on letting this one go any time soon.

FCX — Full Position — +37%

Another materials stock that has been an absolute monster for me. I've also played calls in this one several times over the past year with incredible results.

BIDU — Full Position — +9%

Our biggest option play ever (+1780%) has turned into a long-term hold after breaking out of a multi-year pattern, and this is a stock I want to buy and hold for the next several years.

TAHO — 1/3 Position — -13%

Bought small in this one to start because of the falling wedge pattern. Will buy the rest after a bottom and turn. Not afraid of the unrealized loss here in the short term.

PAH — 1/2 Position — +3%

 Surprise, surprise, another material stock. This is my newest purchase, and once I sell one of my shorter term positions I will make this a full position. I love this spot on the chart.

Surprise, surprise, another material stock. This is my newest purchase, and once I sell one of my shorter term positions I will make this a full position. I love this spot on the chart.

Short Term Investments

Short term investments are investments that I plan on holding 6 months to a year. Note that these investments can always become longer term investments, and I allow them room to do so, but I am more pressed to sell these quickly rather than hold off taking gains. Classifying a stock as short or long term investment means I will not rush to sell if the stock doesn't immediately move the way I want it to as long as the set up is intact (contrary to a trade, where I am in and out much quicker).

AMD — Full Position — +9%

This is the only stock that I feel like is a crowded trade, but I'm playing for exposure to crypto mining and because of the superior technical performance of their product.

BOFI — Full Position — +37%

Great bank stock, no complaints, this one might turn into a longer term hold.

ARNC — 1/2 Position — +3%

Most recent position. Playing a range move back up to 30, but might take awhile.

CYBR — 3/4 Position — +13%

Loved the spot I took in this, and we could see a multi-year breakout from here.

ORCL — Full Position — +3%

Range investment, rinse and repeat, up to $50.

JBLU — Full Position — +2%

Playing for a breakout above $23. Could go for awhile from there.

ONCE — Full Position — +18%

Bought the dip in this stock after it plunged. Playing gap fill to $68

Short Term Trades

Short term trades are for stocks that I buy and plan to hold anywhere from overnight to 6 months down the line. They have much tighter leashes than investments, and I take gains a lot more quickly with these. The set ups are generally different and I am looking at shorter time frames when analyzing them. 

PZZA — Full Position — +2%

Better Ingredients, Better Pizza, Papa Johns. Switched into this after a big win in DPZ. Playing for a move to the upper end of the range.

RDFN — Full Position — +12%

Double down on this one at the IPO-lows, and it looks like it's revving up for another move higher.

AKS — 1/2 Position — +15%

Not a bad return for a few day's worth of work.

To Conclude

This is a snapshot of what my portfolio looks like. My portfolio usually changes its appearance month-to-month, but there are a good number of longer-term holds that I use to stabilize my portfolio. During January, I barely sold anything in my common portfolio, preferring to just let everything trend.

If you have any questions or want to talk about any of these set ups or why I picked these stocks, feel free to shoot me an email at sterling@minotaurinsights.com.

Happy Trading

- Minotaur

The Minotaur Volatility Trading Guide

The Minotaur Volatility Trading Guide

The Dow dropped 1,175 points on Monday, marking its biggest single point decline in history. Markets across the entire country responded in kind, with the US market suffering its first 10% correction since 2015.

The Fear of Investing

 It fascinates me that there is an instrument with the potential to generate enormous wealth – where all you are required to do is put your money into it and hold over a long period of time – and over half of the entire country has no money invested in the market whatsoever.

An article recently published in the New York Times noted that despite the market recording all-time highs month after month, the majority of Americans haven't been able to benefit because they've pulled their money out of their investments. People are afraid of what they perceive to be a dangerous, elevated market, possibly because they saw what a recession could do to their life savings, or possibly just because they saw a movie or read some articles about it.

Another potential reason for the general lack of market participation could be the absolute explosion in cryptocurrency last year. With some currencies experiencing parabolic returns, a lot of younger investors diverted money into Coinbase accounts and watched $500 turn into $5,000. It's hard to throw money into GE when you're being conditioned on 10x returns.

Screen Shot 2018-01-30 at 11.31.32 PM.png

A Market Built on Fear

There are two reasons why I think the market has a lot of room to run way higher, even at levels that could look a little harrowing. The first is that there simply aren't enough people invested in the market currently to cause a real crash. The continuous anticipation of a pullback has many holding cash on the sidelines. It's shocking how many times I've heard "I'm ready to invest, I just need a pullback to get in," and these people don't realize that with less than 50% exposure to the market, that dramatic downside they are anticipating will never come.

The second reason is that there are a litany of catalysts in major industries that will push stocks higher. While at Minotaur we focus primarily on technical set ups, when it comes to general market analysis, it is helpful to look at fundamental factors that drive movement. With corporate tax cuts, infrastructure spending, and the rise in AI and blockchain, there is a laundry list of reasons why companies can continue to grow and increase their efficiencies. There are also a decent amount of industries that are sitting at lows with the potential to bounce back, which would also be positive for the market.

This isn't to say there won't be any downside. It's more to say that the risk of downside shouldn't cripple you. If you waited for a meaningful correction in the stock market, you wouldn't have been able to hop into the market for the entire, incredible 2017, and you would have continued to miss out on a January that has put us only 2% away from where most analysts predicted we would end 2018

In short, stop being so afraid. Stop letting fear prevent you from building wealth. Stop letting hit pieces from CNBC dictate your decisions. Trust in the process, pick your spots, and trade with conviction. We'll be here to guide you.

- The Minotaur Team

The Anatomy of a Breakout

Yesterday, one of our positions, RDFN, broke out and gained almost 5% in a day while the rest of the market played dead for the entire trading session. Given that we only manage a handful of positions at a time, how are we able to pick fast movers in an otherwise dead market? Let’s take a look.

RDFN.png

We picked up RDFN a week ago, before the initial breakout, purely due to the wedge it was forming. This wedge was especially appealing because it bottomed out right at the short term support of the stock. The bottom in this case is signaled by the skinnier, consolidated candles at the end of the wedge. A more bearish-looking setup might have been a wedge that never found a bottom, or one that had more volatile price action.

In general, when a stock’s price action gets “quiet”, big moves tend to happen. With the stock resting at support in a descending wedge, there was a high likelihood that the move would be up rather than down.

A day after the initial breakout, the stock “retested” the previous close, erasing almost all of the gains from the previous day. This is standard for any good breakout, and confirmed we were correct about the price movement, which is why we added even more to this position on the retest. The retest is meant to scare off the weaker hands, specifically investors who tried to chase it up on the initial breakout. The easiest way to avoid getting shaken out on a retest is to buy before the breakout, not during it. As tongue-in-cheek as this statement is, it puts a spotlight on our entire strategy --

Our main emphasis has been buying on the low end of the range, rather than chase something headed up. This takes a tremendous amount of patience, but pays off enormously. Buying at support decreases the emotion you might feel on a retest, and gives you peace of mind that there is a low probability of it going under previous support levels. If it does, you just sell it and move on, simple as that. 

While we don’t have exact predictions on how high this might go, or if it will retest further, it’s nice to see one of our favorite technical setups play out as planned. If you aren’t a premium member and didn’t get a chance to grab this before it went, be patient. Look for setups like this one and buy at the right time, we don’t advise you chase RDFN after the move it made yesterday. 

Happy Trading

- The Minotaur Team

3 Tricks To Increase Your Robinhood Returns

Stop losing out on high return trades by following these simple steps:

 

1. Plan Your Trade

Knowing the specific prices where you're going to buy the stock and when you're going to sell will heavily reduce anxiety and doubt when managing your positions.  If you don’t have a plan, you won’t know what to do when the trade doesn't go your way, and not knowing when to get out of a losing trade can be just as damaging as not knowing when to take profits on a winning trade.  Having a plan and sticking to it will allow you to consistently lock in gains while avoiding losses.

If you plan on holding the stock until the end of time, that's ok too, but shorter term traders should always have an exit point.

Planning trades and knowing where each position stands within your plan will also prevent you from over-positioning or leaving yourself without enough cash to enter another trade should the opportunity arise. 

No one ever went into battle without a game plan, and neither should you. Many traders use Minotaur Insights to help plan and execute their trades with confidence.

 

2. Stop Losses and Limit Orders

You should never lose more than you have to on any position.  You also should be prepared for any quick dips in price to get the best entry imaginable.  If you’re planning your trades, and you can predict where a stock will be at its lowest and highest point, you should effectively be able to buy low and sell high. 

Stop losses prevent black swan events from taking out your entire account, and generally alleviate fears of a market crash; you don’t have to stay glued to the screen for every moment the market is open. If you have stop losses set, you can sleep soundly and know that your positions are protected.

You should also never pay market price for any stocks.  Setting the limit order slightly lower than the market price of a stock will allow you to enter at a better spot and position yourself for larger returns.  

 

3. Use Minotaur Insights

Many traders use Minotaur Insights to find the best trades available on the market, and get into them before they take off. We've successfully put our members into trades that have yielded more than 40% YTD and have increased portfolios to all-time highs. 

Try a Free Trial on us.

Our Best Trade of The Year: 1780% Return

Early last week, I wrote about our BIDU weekly calls, which were up 650% at the time. After writing that post, the Minotaur Team and I did more analysis too see just how far the stock could run by the end of the week. 

We saw a high probability of another 2% move before the option expiry, and held the majority of our contracts throughout the week. 

The BIDU Blowout

As you can see, we closed out our position on Thursday for $4.60 per contract; a 1780% gain and our largest return of 2017 yet. 

At Minotaur Insights, our job is to educate our members about potential opportunities like these, and inform them of our positions in these trades. We encourage prospective members to try us out for free, and see just how much opportunity there is.

3 Reasons To Avoid SNAP Stock

1. User Growth is PLUMMETING

For an unprofitable social media company to have any chance at being profitable, it needs grow its user base. Snap Inc.'s user growth is actually decreasing quarter over quarter, which is a big warning sign for any potential investor.

Here are the user growth metrics for the last 5 quarters:

SNAP Inc User Growth (%)


2. Severely Overvalued

SNAP, at the time of writing, is valued at over $20B with revenues of only $150M in the last quarter and losses of over 2.2B in a single quarter. SNAP is not only unprofitable, it is losing money at an unsustainable rate.

In fact, if SNAP continues to hemorrhage cash as quickly as it has last quarter, it might only have a 18 months before it goes bankrupt. 

The reason that previous social media IPOs such as Facebook and Twitter were able to succeed was because of a growing user base with growing revenues per user. As you'll see, SNAP actually has a decreasing revenue per user.


3. Revenue per User is Abysmal (and Decreasing)

Snap Inc reported revenue per user to be $0.90, down 14% since last quarter. To give you some perspective on this. Facebook's revenue per user is now close to $20.00, more than 20x Snap Inc's. 

Check out Facebook's revenue per user since IPO: 

Facebook never had any decreasing years of revenue per user, and was able to grow this metric while growing its user base

For these 3 reaons, and many more, we are staying away from SNAP stock until we see growth in some of these key metrics.  

At Minotaur Insights, we have a proven track record of putting our members into high-return investments. We educate our members on how to invest intelligently, while making the absolute best returns out of their capital. 

Our BIDU Binge

Hey Folks,

While the market played dead today, our members were having a little fun in Chinese Internet stocks...

BIDU_Badassary

We've been looking at BIDU for the last month as a possible breakout trade. Today, we saw a small sliver of the action that we are predicting, lifting our weekly calls more than 600% in a single day. 

The S&P was down 0.10%.

Come join us and see what else we're up to.