Performance - 2025
1st Quarter 2025
The first quarter of 2025 has been the toughest quarter to trade to the long side since the 3rd quarter of 2023. A hostile overall market acted as a headwind to individual stocks, preventing them from moving higher. This headwind is best represented by the chart of the equal weight S&P 500 shown below. Besides bouncing in early January, the average stock in the S&P 500 has been moving lower from the start of the year all the way into late March 2025 where another bounce started. The same multi-month move lower happened in the 3rd quarter of 2023 where the S&P 500 topped in late July and didn't bottom until the end of October 2023, effectively moving lower for an entire quarter.
A good reflection of this rough trading environment is shown by the results of the U.S. Investing Championship for 2025 through late March 2025. This is a competition where traders pay money to enter, so it's only for those very interested in trading to see where they stack up against their competition. Of roughly 500 entrants in the competition in 2025, only about 50 or 10% of them are positive on the year through the first quarter of 2025. This is a low rate of success which is directly attributable to the hostile environment the stock market has presented so far in 2025.
Poor trading environments not only produce lower odds of finding winning stocks on the long side. They also dramatically reduce the odds of finding big winning stocks that can power a trading account higher. Case in point of stocks that have a mid-cap and above market capitalization (1904 stocks) none of them are up more than 100% so far in 2025! And of small cap stocks (1562 stocks) only 12 are up more than 100% in 2025. These are extremely low numbers of stocks up triple digits for an entire quarter and shows how weak the stock market has been.
Precious metals often will outperform when the stock market is acting weak and that was the case for the first quarter of 2025. Precious metals came out of a correction early in January which was highlighted in Issue #110 titled "Precious Metals Correction Opportunity". GFI was one of the better performing gold mining stocks and was a Stage 2 investor breakout in Issue #112.
Chinese stocks were a top performing sector in the first quarter of 2025 and were one of the only sectors with multiple weeks of a high number of Stage 2 breakouts. Leading sectors tend to have stocks breakout for more than just one week and the Chinese stocks had multiple waves of breakouts. BABA, HSAI, and LX were three of the best performing Stage 2 investor breakouts during the period. Chinese stocks performed exceptionally well during the -10% stock market correction in the S&P 500 and are well poised to continue leading the market higher into the second quarter.
Especially earlier in this correction some short trades worked well. TSLZ was a big triple digit winner as TSLA, which was in the weak auto sector (still transitioning into a robotics stock), completely erased its big move higher and crashed back down to support. TSLZ was mentioned in the Focused Watchlist in multiple newsletters. Homebuilders were a good short in December with ITB breaking down below the 30-week EMA. And bitcoin also broke down along with many other cryptocurrencies which were good short targets after major moves higher. At the end of major rallies the top sectors are vulnerable to big pullbacks and that played out during this latest correction.
Fortunately as discussed in the Timing Model and Correction Playbook, stock market corrections produce huge opportunity and are the best places to find big winning trades. The correction in the first quarter of 2025 and tough trading environment is going to give birth to another big opportunity. Patience will be rewarded, and there will likely be a good trading opportunity to the long side some time during the second quarter.
The following stocks are reviewed in the video below:
HSAI, LX - Issue #105
ITB - Issue #107
TSLZ - Issue #108 and Issue #109
MP, TSLZ - Issue #110
KWEB, TUYA, GFI, XPEV - Issue #112
TEM - Issue #113
BABA, SBIT - Issue #114
NIU - Issue #116
ROOT - Issue #118
NAK - Issue #119
(Note: Stocks in bold were on the Best Stage 2 Breakouts, Focused Watchlist, or Sector Trades list for that issue of the newsletter)
2nd Quarter 2025
As discussed in Issue #122 which reviewed the 1st quarter of 2025, the poor trading environment for that quarter gave birth to huge opportunity in the second quarter of 2025. The correction that started in late February 2025 culminated in a three day panic in early April 2025 that created the biggest opportunity of 2025 so far on the long side. A big theme of this newsletter is how corrections and bear markets are what produce opportunity in the stock market, and it was no different in early April. When many were panicking out of the stock market at exactly the wrong time Issue #124 in particular had some of the best performers so far in 2025 right at the bottom.
The bear market in the first quarter of 2025 created a "second chance buying opportunity" in many stocks that were previous leaders in 2024. Almost all of these stocks were brought back down to the 30-week EMA by the bear market. But in many cases they showed relative strength and started refusing to make lower lows late in the bear market and especially during the three day panic. This relative strength helped identify some of the biggest winners that emerged out of the bear market. Paying attention to stocks that hold up well when the market is selling off is a good way to identify stocks with potential after the correction or bear market is over in the S&P 500.
As evidenced by the list below many of the big winners of this cycle were in Issue #124 which was the week the S&P 500 bottomed. In that issue the first three long term trades were put on using the Long Term Strategy With Stage Analysis. Two of those trades, RKLB and GEV were also on the Best Stage 2 Breakout list that week along with HOOD and PLTR. During this cycle it was important to get into some of these big winners early as the biggest gains occurred during the first six weeks of the rally from mid-April to mid-May. Traders that were too focused on the news or too shell shocked from the previous bear market missed the best opportunity to get into stocks in 2025 so far!
Artificial Intelligence and Utilities were two sector themes that led the market in Q2 2025. PLTR, OKLO, SMR, and GEV were early leaders followed by ODD and monster winner CRWV. CRWV was a new IPO so it had no overhead resistance from the previous bear market. Once CRWV broke above its IPO base it rocketed higher and became the monster stock of this cycle. CRWV was on the Best Stage 2 Breakout list in Issue #127 then had a pullback buy in Issue #128, so two good entries early in its cycle were covered in this powerhouse stock.
Other strong sector themes included quantum computing, space stocks, and rare earth elements stocks. QBTS showed a ton of relative strength during the bear market by holding above its 30-week EMA, and ended up following through higher. QBTS was in multiple issues of the newsletter including on the Best Stage 2 Breakouts list in Issue #126. Other big winners in quantum computing and space included RKLB, ASTS, QUBT, and ARQQ. TMC and MP were two strong performers in rare earth elements stocks with TMC being an early breakout on the Best Stage 2 Breakouts list in Issue #125.
The bear market which ended in April 2025 was the biggest move lower for the S&P 500 since 2022, which created multiple triple digit winning stocks as the market bounced strongly out of the bear market lows. The Correction Playbook and Timing Model are two great resources to learn how to take advantage of the opportunity the stock market gives when it comes out of corrections and bear markets. As we continue into 2025 there will almost assuredly be at least one more if not more than one correction to take advantage of and find big winning stocks which are born from corrections. The key thing to do is stay patient and wait for these corrections to occur, those that are heavy in cash at the bottom of a correction in the S&P 500 have a massive opportunity to buy stocks.
The following stocks are reviewed in the video below:
HOOD, SBSW, PLTR, RKLB, GEV, OKLO, SMR, HIMS, GRAL - Issue #124
TMC - Issue #125
QBTS, ODD - Issue #126
CRWV, OKLO, LFMD - Issue #127
CRWV, QUBT, OUST - Issue #128
SMR, ARQQ - Issue #129
NVTS - Issue #130
MP - Issue #131
ASTS - Issue #132
BKSY - Issue #134
(Note: Stocks in bold were on the Best Stage 2 Breakouts, Stage 2 Breakout Pullbacks, or Long Term Trades list for that issue of the newsletter)