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In this week's issue:

• Weekly Commentary
• Strategy of the Week
• Stocks That Meet The Featured Strategy

In This Week’s Issue:

• Market Outlook – Increased Volatility, Increased Uncertainty
• This Week’s Market Minutes video – Is NVDA Headed Lower? When to Sell a Winner
• Trader Training – Why Reading News is Not Useful in Stock Trading
• Strategy – Stocks in Play

 

Market Outlook – Tech Trouble?

Volatility over the past couple of weeks has been driven by uncertainty over trade wars and tariffs. While the volatility demonstrates investors are uncertain, we have not seen a break of the upward trend lines on the major market indexes. Therefore, the buyers remain in control of the market but risk is increasing, making it essential to watch for sell signals on the stocks you own.

This Week’s Market Minutes Video – Is NVDA Headed Lower? When to Sell a Winner

NVDA had a down weak and many wonder if it is time to sell the market leader. This week, I show you what to look for to know when it is time to sell a winner. Then, my analysis of the stock, commodity, currency and bond markets and the trade of the week on TCTM.

CLICK HERE TO WATCH THIS WEEK'S VIDEO

https://youtu.be/1FxgQg8s1GI

 

Commentary – Why Reading News is Not Useful in Stock Trading

For many investors, keeping up with financial news feels like an essential part of trading. Headlines about market movements, earnings reports, and economic policies can create the illusion of insight and control. However, seasoned traders and market experts often argue that relying on news can be misleading, reactionary, and even detrimental to a successful trading strategy. Here’s why reading the news is not as useful as it seems in stock trading.

1. News is Already Priced In

Stock markets are highly efficient, meaning that publicly available information is almost immediately reflected in stock prices. By the time a trader reads a breaking news headline, institutional investors, algorithms, and market makers have likely already reacted, making it difficult for retail investors to gain an advantage.

2. Emotional Reactions Lead to Poor Decisions

News is designed to capture attention, often using sensational language to evoke emotional responses. Fear-inducing headlines can prompt panic selling, while overly optimistic reports may lead to impulsive buying. Emotional trading tends to result in losses because it leads investors to deviate from disciplined, data-driven strategies.

3. Misinformation and Biases

Media outlets aim to generate engagement, which means they sometimes prioritize eye-catching stories over accurate, unbiased reporting. Additionally, financial news often contains speculative opinions rather than actionable facts. Traders who make decisions based on speculative or biased news may find themselves on the losing side of the trade.

4. Short-Term Noise vs. Long-Term Trends

Most financial news covers short-term market movements, which can be highly volatile and unpredictable. Successful traders focus on longer-term trends, technical analysis, and fundamental metrics rather than reacting to daily headlines that may have little long-term significance.

5. Market Manipulation and Fake News

Some news stories are deliberately spread to influence stock prices. Corporate executives, hedge funds, and influential investors sometimes leak selective information or make public statements to sway market sentiment in their favor. Traders who rely too much on news risk falling victim to market manipulation tactics.

6. Delayed Reaction to Important Events

By the time news is reported, professional traders and high-frequency trading (HFT) algorithms have already executed their trades. These automated systems react to news in milliseconds, leaving retail traders at a major disadvantage. This delay makes it almost impossible to profit from news-based trading strategies.

What Should Traders Focus on Instead?

Instead of relying on financial news, traders should develop a structured trading plan based on the idea that tomorrow’s news is being priced into the market today. This happens because those with the best access to new information start to price in news before it is made public.

Rather than listen to what people or news outlets say, pay attention to what they are doing with their money. I look for abnormal price and volume activity to tell me that the investors with the best access to new information are acting on something important. Applying basic chart analysis skills can provide insight on what investors are doing with their money and paying attention to abnormal trading activity can highlight the stocks that are making significant improvements to their business before the news comes out.

Here are some simple rules to make you a better investor without reading news

1. Don’t fight against pessimism. If the trend for the stock you are considering is down, don’t buy it. Wait for falling tops on the chart to give way to rising bottoms. When this happens, the Sentiment Stockscore will typically move up through 60.
2. Find alpha. Look for stocks making abnormal price breaks through resistance, from low price volatility as bottoms begin to rise. Most strong upward trends start with these abnormal price breaks that surprise the market. It is the sign that investors have found a reason to be excited about the company.
3. Plan to be wrong. No trading or investing strategy is right 100% of the time. This means you must plan to take a small loss if the stock falls back down below support on the price chart. Don’t let a small loss turn into a big loss.

Conclusion

While staying informed about major economic events is useful, using news as a primary basis for stock trading is often counterproductive. The market moves faster than the news cycle, and emotional reactions to headlines can lead to poor decision-making. Traders who focus on data-driven strategies focused on abnormal trading activity rather than reacting to news headlines stand a better chance of long-term success.

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This week, I used the Market Scan to search for stocks that traded at least 10,000 times, were up at least 5% and were under $20. I wanted to look at lower priced stocks that may be trading abnormally in the past week and are starting to turn up again. Here are three that I think should be watched.



1. SPGC
SPGC jumped higher last week but moved up into a downward trend making the pullback on Friday not a great surprise. Today, it started to stabilize and is worth considering if it can start to move up through $0.75 with strong volume.

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2. USEG
USEG was a hot stock two seeks ago and then pullback. Today, it came alive again, indicating the buyers are interested in it again. Watch for a move up through short term resistance at $3.

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3. EQX
EQX is breaking up through resistance that has held up since the Spring of 2024. Volume is increasing indicating investors are taking an interest again. Support at $5.50 needs to hold up.

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