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Kristjan’s back! And I just so happen to have time this Saturday, so you’re getting stream notes from me.

(In case you missed my news on X/Twitter: I’ve got a new job, which I’m absolutely loving, but it’s also leaving me with very little time for personal writing, especially on weekdays. I will write on Substack when I can though!)

A very nice stream (lasting 47:55), with plenty of gems of wisdom from the GOAT.

Today’s notes cover:

• Kristjan’s positions, his girlfriend’s positions, and the day’s notable movers;

• The market environment for the past month, and what to expect now;

• The importance of waiting for the right market conditions;

• Two hot themes, and the importance of keeping track of them;

• Why you should pay attention to a stock’s personality and relative strength;

• Why Kristjan doesn’t believe in selling into strength; and

• As ever, plenty of charts.

Kristjan bought pretty much all of these as EPs. He hasn’t been trading breakouts since 2021 — EPs have been working way better, so those are what he’s been focusing on.

Kristjan said that his girlfriend is “a better trader than I am”, as she got into names that he missed, like $ROKU, covered in more detail later. Though note that she has a much smaller account than Kristjan, around $30,000, so still has the small account edge.

• AFRM

• CDIO

• DRCT

• LMND

• PDD

• PLTR

• ROKU

• UDMY

These were all bought as EPs.

This is a list of stocks that Kristjan added to a watchlist. He always adds the day’s notable movers to a watchlist called ‘zz [date]’, which he then tracks for about a month.

• ALT (GLP-1 theme; discussed in more detail later)

• ESTC

• IOT

• NEXT

• PATH (bought during the stream)

• ULTA (removed later in the stream, as the ADR was too low)

The market has been hot for the past month, but is now short-term extended. Kristjan expects the next month or two to be harder to trade than the past month, but is optimistic overall, so long as we hold the 10- and 20-day MAs. It wouldn’t be unexpected to see the 20- or even 50-day MA tested though — not after the run we’ve had this past month.

One really positive sign is that small and mid caps have participated in this rally. That’s very different from the rallies we’ve had over the past 1½ years.

But the low-volatility uptrend market we’ve had is the best kind of market for swing trading. It’s the type of market that allows you to go on margin, after gradually increasing your exposure and building up a profit cushion.

Kristjan also, once again, strongly recommends we forget the news, and that we ignore people who are bearish (or bullish, for that matter) — remember that 99% can’t make money in the markets or simply trade differently to you. Just listen to what the market is telling you, and focus on setups. As Kristjan said (12:33):

“Good setups, in good markets. That’s all you need to be focused on. Forget about the war in Gaza, forget about the macro stuff, the market will tell you all of these things, all of […] what you need to know.”

But if you missed this rally, don’t start chasing things — remember, we’re now short-term extended, and are due a pullback. There will be new opportunities in future, and as Kristjan says, “you just have to do better next time”.

Having said that, you could enter a new position now if you see a good EP setup — we’ll go through some charts later. You may also want to look at the masterclass from earlier this year.

First, let’s move onto the more timeless wisdom Kristjan shared with us during this stream.

Kristjan explains from 30:30:

“There’s been so many opportunities, no matter how you trade — day trading, swing trading, position trading… I mean, oof, so many [opportunities]. Like, once you get a good market, any type of trading system works.”

As shown in the $QQQ chart above, you wait for those periods when:

• The 10-day MA starts sloping up;

• The 20-day MA starts sloping up; and

• The 10-day MA gets above the 20-day MA.

Basically, you need a market filter. This is something Kristjan has addressed several times in streams this year, including the one on 8 June.

But going back to Kristjan in this stream (31:01):

“That’s when the money’s made. The rest of the time you just wait, wait, wait. Or do very little. You get a few of those periods per year, and you’re probably going to outperform most of these day traders, percentage-wise, and […] it’s a much more scalable way of trading.”

And a bit later (35:10):

“You can trade, like, 20–30% of the year. You just trade these […] periods where the markets are trending higher [and] stocks are making moves like [$VVOS’s — chart discussed later]. This is, like, the best job ever. You can take vacation most of the time.”

(Of course, you still need to keep an eye on the markets so you’re aware of the environment — you can’t tune out completely — but there are a lot of days when doing nothing will improve your performance.)

Two things strike me here:

This point is another one I’ve covered many times before, but it is a particularly important one. You have to identify themes, and make sure that you’re in the hottest ones.

As part of this, you must keep track of themes by compiling your own watchlists — like the one Kristjan compiled for AI and quantum earlier in the year. I published it on my Substack too, though this list is out of date now (on today’s stream (37:08), Kristjan had 120 names on his list).

If compiling such lists is something you struggle with, stugots’s watchlists may offer a useful starting point. However, you need to learn to do this yourself — in trading, shortcuts can only take you so far. You have to do your own research.

Edit: If the stugots link doesn’t work for you, please see my comment below.

Another good point made by Kristjan during this stream is that just because a theme is acting strong, doesn’t mean that you’re going to get big runners within it. You can get themes where stocks are acting well, but aren’t great for trading because, for example, they move too slowly. It’s possible that the GLP-1 theme is one of those — more on that theme below. But if you do get these big runners, you can be looking at five- and ten-baggers.

Let’s talk about some specific themes Kristjan mentioned during this stream.

AI is the big, obvious theme of this year — we’ll go over some charts towards the end of today’s notes. To me, this also makes sense from a fundamental perspective — think about O’Neil’s lesson on the biggest winners; specifically, that these are often the companies that change the way we live, work or play. AI clearly has the capability of doing all three.

But when a theme is hot, like AI back in April this year, you don’t need to be position trading as per O’Neil’s style to make good money. Kristjan brought up $CXAI as an example:

This stock traded several million shares in the first minute of trading on 13 April 2023. As Kristjan says (38:05): “That’s something you got to pay attention to.” $CXAI ended up making a 550% move in two days.

Like Kristjan points out, if you catch just a few of these big moves per year, you can have incredible annual returns. I’m currently also working on a series on David Ryan (in a very labour-intensive way, which is why it’s taking me so long — I believe the end result will be worth it though, as it should make for a really valuable, enduring resource). Anyway, Ryan frequently says something similar: so long as you keep those losses small, and catch one, two or three big winners a year, you can really do well in the markets.

However, the markets do need to be in an uptrend for this type of trading to work.

Kristjan also mentioned weight loss drugs (or GLP-1/glucagon-like peptide 1) as another recent hot theme (36:38). For example, see $LLY and $NVO below, though note that neither of these stocks are great for trading.

So that got him excited about the potential EP — though it ultimately failed — on $ALT (a name he added to his watchlist of today’s notable movers), following positive trial results:

The impression I get is that many traders put a lot of weight on theme for breakouts, but less so for EPs. I think the above offers a useful lesson on how theme is important for both these setups, as well as others.

I also think that Kristjan’s remarks on some stocks not being suited for trading leads well into his next lesson:

Someone in the chat asked about $ESTC:

Kristjan’s response was (25:18):

“The problem with this stock is it’s incredibly choppy. Like, some stocks are not meant to be traded. And even though this EP looks good, look at how this thing trades — this thing never has any clean trends. […] Even during 2020, it was such a mean reverting stock. This is an avoid stock — you should never trade a stock like this.”

He gave $PATH as another example (25:42), particularly in terms of how it traded on the way down in 2021.

That said, $PATH looks better now, having gone sideways for two years while making higher lows, and also had great volume on the day of the stream. Kristjan did say that it “may” be able to have a clean uptrend, and combined with the fact that it was looking like it could have the highest-volume day ever on a green day, that’s presumably what made him take a (probably small) position in this name later in the stream (31:51).

But going back to the main lesson on stock personalities, in Kristjan’s own words:

“This is something you learn over the years. Some stocks are just incredibly choppy. They have different personalities.

“It’s also because they’re NYSE stocks. [They] don’t have as good momentum as NASDAQ stocks. Generally, that’s what I’ve found.”

As ever, confirm things for yourself — don’t just take someone else’s word for it. That’s the only way you can build true conviction, and from what I’ve seen, true conviction is an absolute must to being able to maintain discipline every single day.

Here’s a step by step I wrote a few months ago on how to build conviction, based on Kristjan’s Chat With Traders interview.

One stock that had two big earnings EPs this year is $ANF (44:14): on 24 May 2023 and on 23 August 2023. The volume on those days was huge, which is exactly what you want to see for an EP.

But while $ANF has been going straight up, look at what $SPY was doing between late July and late October this year:

It was in a multi-month correction. Nonetheless, funds were obviously looking to buy $ANF, not caring about what the market was doing at that time. This is something you tend to see in powerful EPs: they can go and go and go, even if the market is pulling back at the time.

That said, be aware that most stocks generally do follow the market. But that’s what makes these stocks, which can swim against the current, special. That sort of relative strength is precisely what you’re looking for if you want to be in the very best names.

I touched on this earlier, when listing Kristjan’s girlfriend’s positions, but it’s worth repeating: small account edge. If you have a small account, you can trade less liquid names, giving you far more opportunity.

The problem is that once you get good at trading, that account won’t be small for long. So it’s an edge that you will lose if you do things right. Then you’ll need to do stuff like focusing on larger-cap stocks and on longer time frames.

Kristjan doesn’t believe in ‘selling into strength’ (42:10), particularly for micro caps. He doesn’t believe in it because of moves like this:

Had you bought the EP in $INDO on 22 February 2022, then sold it a couple of days later into strength, when you were up 150%, you’d lost out on some seriously big gains — a ten-bagger, and then some.

Instead of selling into strength, Kristjan recommends using an intraday moving average as a trailing stop for these types of crazy moves. Specifically, he suggests the 10 and 20 EMAs on the hourly chart.

For those of us with a small account, $DRCT had a very nice earnings EP on 10 November 2023, on enormous volume, and made a big move since.

Kristjan called this a “five-star-plus” EP: a stock that’s been going sideways for year, then had a huge earnings beat on massive volume.

This stock had an EP on 29 November 2023 with “insane” volume, following FDA clearance news.

The stock gapped up almost 200%, pulled back, then took out the ORH (opening range high) an hour and a bit after the market open. Kristjan calls this “textbook”: a stock that has a huge gap up, doesn’t give much back, then takes out the ORH to go for a big intraday run — in this case, 280%. On huge volume, of course.

Also see the 5-minute intraday chart:

This AI-themed stock had two EPs this year: on 25 May 2023 and on earnings on 2 August 2023. The second EP had considerably higher volume than the first EP.

Kristjan mentioned that he didn’t realise this was an AI name until recently, so missed the EPs. I do think that shows clearly how important theme is to him though: finding a good setup, even an EP setup, is only a small part of the equation. It’s much more important to be in the right themes. Preferably the leading stocks of the strongest themes.

Another AI-related name, which had an earnings EP on 3 May 2023. Kristjan also called the gap up on 25 May 2023 an EP during this stream. (I think that one’s more debatable, as the stock wasn’t coming out of a period of neglect. But the volume was good that day, it had news, and you shouldn’t have been stopped out if you traded it.)

Now, the stock is forming a nice multi-month base.

This had a nice earnings EP on 21 November 2023, on enormous volume, plus it has an AI theme.

Kristjan said $AFRM had two great EPs this year: on 25 August 2023, following earnings, and on 2 November 2023 on news (though the volume wasn’t as impressive as on the earnings EP).

$ROKU had an earnings EP on 2 November 2023 (caught by Kristjan’s girlfriend, but not by Kristjan himself, to his annoyance):

$VFS offered a five-star shorting opportunity on 28 August 2023 — one of the best this year, Kristjan reckons — which he unfortunately missed.

All my Qullamaggie notes are available here. For just stream notes, use this link.

The Trading Resource Hub’s full archive is available here.

To learn more about Kristjan Kullamägi, aka Qullamaggie, and the way he trades, visit qullamaggie.com.

All past streams are available on Kristjan’s YouTube channel.

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