Short lessons on momentum trading, every day.

The Screen Behind Today’s Breakout List

One of my favorite ways to use the Relative Strength Stock Screener is starting with the Leaders / CANSLIM preset, then layering Today’s Market Movers on top of it.

That combo has been surfacing a lot of names I like today.

ALAB is breaking out to new highs.

LRCX is breaking out to new highs as I write this.

TER is right near new highs.

This is why I like combining leadership filters with current-day strength. It helps narrow the market down to the names that already have strong characteristics and are actually moving right now.

Can’t Stop, Won’t Stop: FIX

Comfort Systems USA (FIX) continues to refuse to end its trend.

Every time the stock looks like it may finally need a deeper reset, buyers show up. It has repeatedly found support around key moving averages, including the 10-week and 50-day area, and continues to hold near highs after a massive multi-year advance.

This is what real leadership often looks like. Strong stocks do not always give easy pullbacks. They ride the short-term moving averages, shake out weak hands, and keep pressing higher while traders wait for a better entry that never comes.

The fundamentals still support the move. FIX continues to show strong earnings growth, strong sales growth, high ROE, and a 98 MTS Score.

At some point, every trend ends.

But until price actually breaks, the message is simple:

The trend is still alive.

Not All Semis Are Breaking Down

Semiconductors have weakened, but leadership has not disappeared.

A few names are still bucking the trend.

TER, TSM, and LRCX are all acting well, with each either near new highs or breaking out toward new highs today.

Right now, TER, TSM, and LRCX are still showing strength.

Is APH Setting Up for Another Run?

Amphenol (APH) has already been a big winner.

It was strong in 2023, followed through in 2024, and continued higher through 2025. Since setting its high in early 2026, the stock has been consolidating and forming what looks similar to a double-bottom type structure.

The fundamentals are still strong.

Earnings growth had started to decelerate, but sales have remained consistently strong. Now estimates suggest EPS growth could begin picking back up while sales strength continues.

APH currently has an RS Rating of 80, which meets the O’Neil leadership threshold. Sales growth is running near 58%, EPS growth is around 24%, ROE is 36%, and pre-tax margins are near 21%. It is also part of the Hardware, Equipment & Parts group, which has been a leading industry group.

Technically, APH is approaching new highs again after rejecting near all-time highs in late June, pulling back to the 10-day line, and now moving back up. That pullback created a higher-low shelf, giving traders a logical area to define risk.

The breakout level is around $167.

A breakout through that area on volume would be ideal. With a stop around $155.50, the setup offers a defined risk area and a potentially attractive risk/reward if buyers step in.

APH may not be the flashiest growth stock in the market, but it has the combination that matters: a long-term winning trend, strong sales, good earnings, high-quality margins, relative strength, and a technical setup near highs.

Nasdaq at the 50‑Day, ALAB Near Highs

The leaders usually show up first.

ALAB is doing something worth paying attention to.

While the Nasdaq 100 has pulled back to its 50‑day moving average and the broader market has been weak, ALAB has continued to act like a true tech growth leader. It is holding near its highs, riding above short term key moving averages, and showing strong relative strength across multiple timeframes. That is not something to ignore if you study leadership and momentum.

William O’Neil put heavy emphasis on leadership, relative strength, earnings power, price action, and overall market direction. Their work shows that the best stocks often reveal themselves before the indexes fully confirm a new leg higher. The strongest stocks tend to correct less, tighten up faster, and move back toward their highs while the averages are still working through supply.

O’Neil described this dynamic clearly when he wrote about powerful stocks that refuse to break down during market weakness. In How to Make Money in Stocks, he noted that a true leader can pull back, build a tight consolidation while the general market makes new lows, and then be one of the first names to break out to new highs when the pressure comes off. In other words, a leading stock that holds up better than the market during a pullback is often giving you a constructive signal, not just random noise.

That is exactly the kind of behavior you want to see from potential big winners. True leaders:

• Hold up better than the market during pullbacks.

• Recover faster once selling pressure eases.

• Push toward or through new highs while the average stock is still trying to find support.

None of this means you blindly chase strength. The overall market still matters, and any entry still has to offer a defined risk/reward with a logical pivot and a clear line in the sand if you are wrong, but this is exactly why tracking leadership and relative strength is so important.

When a stock with strong fundamentals and a powerful price trend keeps acting right while the Nasdaq 100 and S&P 500 is sitting on its 50‑day moving average, it is usually telling you something. Right now, ALAB is showing the kind of leadership that belongs on the radar.

The Biggest Winners Were Already Winning

There is a persistent belief in investing that the biggest winners start out hidden, cheap, and overlooked.

The data tells a different story.

“From the early 1950s through 2008, the average RS Rating of the best performing stocks before their major run ups was 87. In other words, the best stocks were already doing better than nearly 9 out of 10 others when they were starting out on their most explosive advance yet.”

— William O’Neil

What is striking is how little this has changed since 2008. Markets have evolved. Technology has accelerated everything. Information moves instantly. Yet the same pattern holds. The strongest stocks tend to keep getting stronger.

This runs against instinct. Buying strength feels like chasing. Waiting for something to look cheap feels safer and more rational.

But the market does not reward what feels comfortable.

The next big winner will not look like a bargain. It will look like a stock that is already outperforming, already attracting demand, and already separating itself from the crowd.

Most people will wait for a pullback that never comes.

Rotation Beneath the Surface

Tech, AI, and many of the prior growth leaders are taking a breather after a powerful move.

But the market internals are not showing money aggressively leaving equities.

Up volume is still outpacing down volume across the daily, weekly, and monthly timeframes. Nasdaq net 52-week highs remain positive. And more than 50% of stocks are still above their 50-day and 200-day moving averages.

At the same time, relative strength is showing up in healthcare providers, pharma, biotech, homebuilders, banks, insurance, and broader financials.

If this were a major risk-off shift, we would expect down volume to take control, new lows to expand, and leadership to narrow into only classic defensive areas.

So far, that is not what the evidence is showing.

Short-term breadth has cooled, and tech is clearly digesting. But the bigger picture still looks more like rotation beneath the surface than money leaving the market in fear.

As long as the major indexes hold key support, up volume remains constructive, new highs continue to outpace new lows, and leadership keeps expanding into other groups, this looks more like a healthy pause inside an uptrend than the start of a major defensive unwind.

Pullback or Something More?

When you zoom out, we are still in a bull market and in a Stage 2 uptrend.

But after the powerful run we have had off the lows, some type of pullback, reset, or longer consolidation should not surprise anyone.

Markets do not move straight up forever.

The first dip looked normal. Then price bounced, failed to reclaim the prior high, and came back down toward the rising 50-day area.

That changes the short-term read.

Now the question is whether this turns into a constructive sideways consolidation, or whether selling pressure expands into something more serious.

This is where O’Neil’s framework helps.

In a bull market, constructive pullbacks and handles tend to stay controlled. They usually remain in the 8% to 12% zone. Once price action becomes much wider, looser, and more erratic, the risk starts to increase.

So far, this still looks normal.

The longer-term trend remains intact. Price is still above the 200-day. The correction has not yet turned wide and disorderly.

But it is not an all-clear signal either.

The market still has to prove support.

• Do sellers dry up?

• Does price tighten up?

• Do buyers step back in?

• Can the Nasdaq reclaim the shorter-term moving averages?

Ideally, we could benefit from some VCP-type action from here. A few contractions, tighter price action, lighter volume on the pullbacks, and then a stronger move back through the shorter-term moving averages would be good.

But the real read is not just the index.

It is what is happening beneath the surface.

• Are leading stocks still acting right?

• Are breakouts working or failing?

• Is institutional demand still showing up?

That is where O’Neil would focus.

And none of this came out of nowhere.

We have been seeing these changes take place over the last few weeks in the Big Picture work. The rotation, the change of character on June 5th, the failed bounce, and the test of key moving averages were all signs that the tape was changing.

The question is whether you were paying attention, or whether you had your head buried in the sand.

For now, I would call this a normal bull-market pullback that is trying to turn into a constructive consolidation.

The next move will tell us a lot.

M = Market Direction

“If you’re wrong about the direction of the general market, and

that direction is down, three out of four of your stocks will plummet along

with the market averages, and you will certainly lose money big time, as

many people did in 2000 and again in 2008.” -William O’Neil

Big Shift in Relative Strength

Big change in relative strength over the last few weeks.

For weeks/months, the clear leadership across the major indexes has been the Nasdaq 100, Nasdaq 100 equal weight, Russell 2000 growth, and IWM.

Sector leadership has also been obvious: XLK technology has dominated, with semiconductors leading this Stage 2 uptrend since the March 30th lows. That strength has been followed by other tech-related groups like computer hardware, electrical equipment, software, and other growth areas.

But this week, the shift is much clearer.

Now the leadership is coming from:

• IWM, Russell 2000

• IWN, Russell 2000 Value

• MDY, S&P 400 Mid Caps

• DIA, Dow Jones

On the sector side, XLV healthcare is leading, followed by financials, industrials, and utilities.

Under the surface, the strength is showing up in healthcare providers, pharmaceuticals, homebuilders, biotech, insurance, and banks.

This has been building for a few weeks, but this week is the clearest rotation we’ve seen.

Make sure to dive into the next Big Picture Market Pulse before the market opens Monday.

It should be out soon.

Risk/Reward Changes With Every Candle

Paul Tudor Jones said:

“I can always tell a rookie trader because he will ask me, “Are you short or long?” Whether I am long or short should have no bearing on his market opinion. Next he will ask (assuming I have told him I am long), “Where are you long from?” Who cares where I am long from? That has no relevance to whether the market environment is bullish or bearish right now, or to the risk/reward balance of a long position at that moment.” -Paul Tudor Jones

That is one of the most important lessons in trade management.

The market does not care where you got in.

Your original entry does not determine whether the trade is still good today.

What matters is the current evidence.

• Is the market still acting right?

• Is the stock still acting right?

• Has the setup matured?

• Has the risk/reward changed?

Too many traders anchor to their entry price, their original thesis, or someone else’s position.

But the only question that matters is whether the trade still makes sense right now.

Not yesterday.

Not at your entry.

Right now.

The Talent Has Them

Ed Seykota once said:

“Good traders have a special talent for trading just as good musicians and good athletes have talents for their fields. Great traders are ones who are absorbed by the talent. They don’t have the talent, the talent has them.”

That is the difference.

Good traders may have skill.

Great traders are consumed by the craft.

They study it.

They live it.

They think about markets when nobody is watching.

They review mistakes most people would rather forget.

They are not casually interested in trading.

They are absorbed by it.

And that is why they keep improving long after most people quit.

Risk/Reward Changes With Every Candle. Most Traders Realize It Too Late.

As a growth stock trader and momentum trader, I am not trying to guess the bottom.

I am also not trying to pick the top.

I wait for the market to confirm.

Then I do the same thing with individual stocks.

This is something I talk about in Module 6 of the Momentum Trading Strategy Course in the risk management section.

Risk-reward is not static.

It changes as a stock moves.

After a long consolidation, correction, or deep pullback, the first few days off the lows are always hard to trust.

You do not know if it is real yet.

It could just be another failed rally.

It could just be another bounce before the next leg lower.

But once the market gives a real green light, that is where your focus should shift.

• A follow-through day.

• Price reclaiming key moving averages.

• Leading stocks setting up.

• Stocks breaking out to new highs.

William O’Neil talked about this idea repeatedly. The goal is not to predict the market. The goal is to understand what the market has actually done and what it is doing now.

He also wrote that investors should buy stocks as they emerge from properly formed bases and begin making new highs in price.

Mark Minervini described a similar moment in Trade Like a Stock Market Wizard.

When a leading stock moved into new high ground as the general market rallied off its lows, he wrote:

“This was the green light to buy.”

You are not trying to be a hero at the bottom.

You are trying to recognize when the evidence has changed.

Now look at MU.

This was not some random stock waking up.

This name has been showing the characteristics of a leader for months.

• Strong relative strength.

• A hot industry group.

• Explosive earnings.

• Explosive sales.

• Strong margins.

• Strong institutional sponsorship.

• Price above key moving averages.

• A cup-with-handle type setup.

• A breakout to new highs on strong volume.

Back in April, during this breakout, the risk-reward was much better.

The multi-month consolidation gave the market and MU the time it needed to reset, shake out weak holders, and build the structure for its next leg higher.

Then, after briefly breaking below the 200-day moving average and washing out many traders, the stock reclaimed key levels, tightened up, and broke out to new highs.

That kind of action can fuel a move that goes much higher and lasts much longer than most people expect.

Now the stock is up roughly 20R from the initial risk.

Could you have made money buying it later?

Sure.

But that is not the point.

The point is that the risk-reward relationship changed.

The market can still go much higher from here.

Or it may not.

Nobody has a crystal ball.

But what we can know is when the market gives us a green light, when leading stocks are setting up, and when the risk can be defined before the move becomes obvious to everyone else.

This is why experienced traders get excited after long consolidations and deep corrections.

Not because the damage is fun.

Because corrections reset the playing field.

When conditions improve and leaders begin breaking out, the risk-reward is usually far better than it is months later after everyone finally feels comfortable.

By the time the trade looks obvious, the best risk-reward is usually already behind you.

Shiny Object Syndrome Is Killing Your Trading

There are many different ways to make money in the markets.

You can trade fundamentals, technicals, or a combination of both.

Value, growth stocks, trend following, mean reversion, the list goes on.

There is not only one way to win.

But eventually, you have to pick a lane.

At some point, you have to commit to one method, turn the blinders on, and dedicate yourself to becoming excellent at that system.

Most traders never do this.

They bounce from strategy to strategy.

Then they find another indicator, another guru, another screener, another setup.

And after years of doing this, they still wonder why they have not developed real skill.

But skill is not built by bouncing around.

Skill is built through focused practice on your craft.

Learning the same system so deeply that you start to understand its rhythm, strengths, weaknesses, and personality.

I know people who have been “trading” for 10 years and still are not successful because they never truly committed to anything.

And I know others who spent 3 years focused on one sound strategy and became far more skilled.

Not because they were smarter.

Because they stopped chasing everything.

There are many ways to make it in the markets.

But bouncing around forever is not one of them.

You Have Not Earned the Right to Trade Larger Yet

Most traders skip the step that would probably save them.

Many leading trading firms do not just hand traders money and tell them to go figure it out.

They make them trade in simulation first.

Not for a day. Not for a week.

Until they prove they can actually trade the strategy.

Then, when they go live, their size is small.

Very small.

Only after they show consistency does the firm gradually increase their buying power.

You must earn the right to trade larger.

Now compare that to what most traders do.

They learn a setup on YouTube, fund an account, take full-size trades, have no clue how to use position sizing, lose money, change strategies, repeat the cycle, and wonder why they cannot find consistency.

If you have not found success in the markets, I can almost guarantee you have not followed this process.

Why not?

Stop wasting time and commit to doing it the right way, or save your money and do something else.

The New Highs Everyone Is Afraid to Buy

Most investors are trained to look for bargains.

But the greatest growth stocks often begin their biggest moves near new highs, not cheap-looking lows.

That does not mean chasing anything that is up.

It means learning when strength is evidence of leadership.

New post below.

https://tradingmomentum.substack.com/p/the-stock-looks-too-high-that-might

Most Investors Miss Great Stocks for This Reason

A stock can be high and still be early.

That one idea is hard for most investors to accept.

They see a stock breaking into new highs and immediately think:

“It’s already up too much.”

But many of the biggest winners in history looked “too high” before they went much higher.

The real skill is learning the difference between a stock that is extended and a stock that is emerging as a true leader.

The Traders I’d Bet On

If I had to bet on which traders were most likely to make it, I wouldn’t automatically bet on the smartest ones.

I’d bet on the ones with:

• Belief

• Grit

• Resilience

• Adaptability

• Confidence

• Humility

• Self-awareness

• Discipline

• A willingness to work hard

Because trading is not just about knowing the rules.

It is about becoming the kind of person who can actually follow them.

The Stock Market’s “Great Paradox”: The Answer

For all the growth stock investors and momentum traders, the answer is:

Stock A.

And here’s why.

If you didn’t pick A, don’t feel bad.

Most of us probably would not have picked A when we first started either.

That is part of what makes the market so difficult.

A lot of what feels safe is actually dangerous.

And a lot of what feels risky is often where the real opportunity is.

Most people are naturally uncomfortable buying stocks near new price highs.

William O’Neil saw this over and over again.

He explained that many individual investors who attended his seminars felt uncomfortable buying stocks making new highs, and it was not just retail investors. He found that even many institutional investors had the same problem.

Why?

Because most people think it is safer to buy something that looks cheap.

They see a stock that is down and think:

“It’s already fallen so much. How much lower can it really go?”

But O’Neil’s study of the greatest stock market winners proved the opposite.

The old saying “buy low and sell high” sounds smart, but for growth stock investing and momentum trading, it is often completely backwards.

O’Neil said:

“What seems too high in price and risky to the majority usually goes higher eventually, and what seems low and cheap usually goes lower.”

That is the great paradox.

The stocks that look extended, expensive, or “too high” to most people are often the same stocks under heavy institutional accumulation.

The stocks that look cheap, beaten down, and like “good deals” are often cheap for a reason.

O’Neil also studied stocks making new highs versus stocks making new lows across many different bull market periods.

The conclusion was clear:

Stocks on the new high list tended to continue higher.

Stocks on the new low list tended to continue lower.

And this was not just something O’Neil preached.

Jesse Livermore figured this out decades earlier.

Nicolas Darvas found the same thing with his box method.

Jack Dreyfus, one of the best-performing mutual fund managers of the 1950s and 1960s, was also buying stocks making new highs. O’Neil studied Dreyfus and found the same lesson again:

The biggest winners were usually not hiding in the bargain bin.

They were showing strength.

Mark Minervini, David Ryan, Dan Zanger, Kristjan Kullamägi all understand this and the importance of focusing on stocks that look like Stock A.

Strength is not something to fear.

For this style of trading, strength is usually where you want to be looking.

If you didn’t pick Stock A, it may just be a signal that there is more work to do.

This weekend, read a chapter or two of William O’Neil’s How to Make Money in Stocks.

Or maybe you discover that growth stock investing and momentum trading does not fit your personality.

And that is okay too.

But I think the first option is much more likely.

Most of us felt uncomfortable with this style at first.

Many of us only came to it after failing with other strategies that felt easier, safer, or more logical.

But the market does not reward what feels comfortable.

It rewards what works.

Have a great weekend.

The Nasdaq Is About 1% From Highs. Are You Looking in the Right Areas?

This three-day break from the market is a gift. It gives you time to step back, clear the noise, and study the big picture before drilling down into individual stock selection.

The Nasdaq-100 is now only about 1% from all-time highs, technology is back on top, and semiconductors are leading the market again. That does not mean every stock is a buy, but it does mean we need to be focused on the right areas.

Read here: https://tradingmomentum.substack.com/p/the-green-light-is-back-but-only