What’s Next After a Four-Week Tech Wreck By Michael Salvatore, Editor, TradeSmith Daily In This Digest: - A simple test of investment appetite…
- Four-week tech wrecks are rare, and here’s what happens next…
- Gold’s due for a cooldown…
- The latest Quantum Edge Hotlist signals…
- Big news for TradeSmith this week, sign up to hear it with one click…
“You know how I know it’s a bull market?” If you’re already tired of hearing that from me, that’s your sign from the market gods to get out there and buy some stocks. Because yes… This is still a bull market. Stocks will be higher a year from now than they are today. If you want to wait until stocks are at new highs to buy, be my guest. But you’ll be waiting for no good reason. We talked about zoomed-out-type reasons to buy on Friday. The Federal Reserve has pivoted slightly dovish, all but stopping quantitative tightening and letting more liquidity stay in the financial system. This comes while the rest of the world is already actively easing. Europe and China especially, the two regions with some of the best ex-U.S. returns in 2025, are easing their economies heavily as they struggle. But let’s talk about some zoomed-in-type reasons today. One I have in mind is that a lot more stocks are on long win streaks right now than down streaks. Looking at the S&P 500, more than 40 stocks have been up at least four days in a row and as much as eight – congrats to CenterPoint Energy (CNP) investors. Know how many stocks are down four days in a row? None. The worst losing streak is two days. Things are rosy in the Nasdaq 100, too. Seventeen stocks are up at least three days in a row and as much as five – shoutout to Intel (INTC). None are down more than two. So, investors across two major benchmarks are more willing to buy upside momentum than they are to short downside momentum. That reads bullish to me. | Recommended Link | | | | While Elon Musk’s DOGE is getting all the headlines… He just did something that could have far bigger implications for America… and the value of the U.S. dollars in your bank account… and your Social Security checks. Click here to see the details. |  | | It’s not all we can look at… Humor me for a moment with this chart: 
The blue line is the number of New York Stock Exchange stocks trading at new 52-week highs minus the number of NYSE stocks at new 52-week lows. When the spread is above zero, more stocks are trading at new highs – and vice versa. The red line is the S&P 500 ETF (SPY). Right now, the spread is at 5 – so there’s a slight edge on the bull side. And you’ll notice that the ratio tends to hang out well above zero. But what’s just as interesting to me is those rare moments where the spread of these two counts plunges well below zero. I’ve marked a few of the more extreme drops with vertical dotted lines above. As you can see, buying during those quick drops below zero during bull markets is a really good idea. From 2014 on through 2021 (the last bull market), buying massive breadth collapses proved very profitable. Note how we saw only one major breadth collapse in 2020, during the pandemic panic crash. After that, we pretty much exclusively saw net new highs until late 2021. However, it didn’t work quite as well in 2022, where the net new highs number kept making progressively worse lows. That’s what you see in bear markets, or times of prolonged distress like in 2015. But we have to understand the underlying macro difference between bull markets and bear markets over the last 15 years. The 2009-2021 bull market was characterized by highly accommodative monetary policy out of the Fed. The 2022 bear market was the opposite – we saw highly restrictive monetary policy out of the Fed to control inflation. Once the market digested it and the Fed stopped hiking in July 2023, the bull took off again. To take this full circle, we’re in another era of “friendly Fed.” The Fed is set to cut rates and is already paring off its balance sheet tightening program. It’s a lot more 2009 and 2020 than it is 2022. Let’s take it back to streaks for a moment… The Nasdaq 100 ETF (QQQ) has closed lower four weeks in a row. And as I write on Friday, it’s looking all but certain it will close lower for the fifth week in a row. A tech wreck like this is relatively rare. It’s happened for 42 distinct four-week periods since 1990. Are these four-week down streaks a buy or a sell? Let’s find out: - Four weeks after a down streak like this, QQQ is up 64.3% of the time for an average trade result (wins and losses) of 2.3%. If you’d traded every signal like this, you’d be up 100%.
- Eight weeks later, QQQ is up 69.4% of the time for an average trade of 2.4%. Trading every signal (and ignoring new ones during the period) would’ve landed you a smaller, 87% gain.
- And 12 weeks later, QQQ is up 72.7% of the time for an average trade of 5.4%. Trade every signal, and you were up 178%.
But I have some real good news for the long-term tech investors… I tested every holding period from four weeks to 48, to see which period over the course of a year had the best results. Turns out the best period was 47 weeks, where you were up an average of 15% over 19 separate periods… with a win rate of 73.7%. Your net gain trading this way is 285%. If you’re not excited to buy stocks after that, that’s on you… But if you are, you’ll want to check out this list… Each week, our growth investing specialist Jason Bodner shares some of the top Power Factor stocks with his subscribers. What are Power Factor stocks? Jason defines them as those with… - Fundamental outperformance – stocks with the strongest earnings, revenue, and profit margin growth.
- Market-beating momentum – the stocks moving up faster than any other, thanks to institutional buying.
The latest list is in, and once again, we’re seeing a mix of returning favorites and fresh breakouts. 
This week, Tradeweb Markets (TW) and Brown & Brown (BRO) lead the pack, both posting strong Quantum Scores of 84.5. These investment and insurance service firms continue to benefit from institutional buying. Several healthcare and biopharma names have made their way onto the list, including ADMA Biologics (ADMA) and TG Therapeutics (TGTX), both securing spots in the top 10. Rollins (ROL) and McKesson (MCK) also show strength, with McKesson reinforcing its dominance in healthcare support services. Meanwhile, Aris Water Solutions (ARIS) and Heico (HEI) are two industrial standouts that have broken into the rankings, showing that strength is spreading beyond tech and healthcare. On the other end, Structure Therapeutics (GPCR) continues to struggle, joined by Xencor (XNCR) and Biohaven (BHVN). Cohu (COHU) and Cannae Holdings (CNNE) round out the weakest names, each with Quantum Scores of just 22.4. The Big Money doesn’t lie. The strongest names continue to attract institutional capital, while the weakest struggle to gain traction. Whether stocks are up or down one week or the next, a great strategy is to simply focus on where the Big Money is focusing its attention… Then again, maybe you’d like to buy gold instead… Gold hit $3,000 per ounce recently, a rejoicing moment for gold bugs everywhere. (And for us, who have been telling you to buy gold going back to December 2023.) However, it’s now time for gold to take a breather. Take a look at this chart… 
The price of gold is making new highs while the 14-day Relative Strength Index (RSI) is making lower highs. That’s a sign of negative divergence – a sell signal. Not only that, gold’s RSI is threatening to cross below the 14-day RSI-based moving average. We can see that over the past six months, crosses below this line have led to losses in price before the uptrend resumed. I’m not the only one who thinks gold is due for a cooldown here. My friend Jeff Clark thinks the same, writing to his subscribers on Thursday: The gold sector is overbought. GDX is trading historically far above its 50-day moving average line. It has pressed higher for seven straight days. There’s negative divergence on the technical momentum indicators. And it looks vulnerable to a swift pullback. Take a look… 
GDX rarely strays more than 10% away from its 50-day moving average (MA, the squiggly blue line on the chart) before reversing and heading back toward the line. The red arrows on the chart point to the multiple times last year GDX traded 10% or more away from its 50-day MA. Each time, the stock move reversed back toward the line almost immediately. Yesterday, GDX closed more than 13% above its 50-day MA. It’s vulnerable to a downside reversal. Sure enough, the GDX put option trade Jeff recommended on Thursday is up about 21% as I write. That doesn’t mean the gold bull market is over. On the contrary, this trend looks super strong. It just means that if you’re looking to buy gold, you should wait another week or so to take advantage of better prices. TradeSmith enters a new era this week… On Wednesday, TradeSmith CEO Keith Kaplan is announcing something “very out of the ordinary” in his TradeSmith 20th Anniversary Event. - Keith will fill you in on all the big changes and upgrades that will make TradeSmith a very different experience in 2025… with two major additions that represent the biggest expansion to the TradeSmith brand ever.
- Big news on our Options360 and Predictive Alpha systems – which Keith will be giving away as part of a special anniversary offer only to attendees of his Big Reveal…
- And the new additions to TradeSmith’s team of seasoned research analysts, whose services are also part of the deal.
Sign up for the event instantly by clicking here, and we’ll see you Wednesday at 10 a.m. Eastern for The Big Reveal. To your health and wealth, 
Michael Salvatore
Editor, TradeSmith Daily | 
