STOCK GUIDE 2022 Q4

STOCK MARKET
PSYCHOLOGY:
The Mental Side of Trading
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Stock Guide // 2022 Q4
It’s easy to get consumed with the
prospect of making tons of money in the
stock market––so much so that we may
sometimes forget to take a step back
and consider that there’s a psychological
component to trading.
One of the most important qualities of
any successful trader is having the guts
to look at a bad trade and understand
what went wrong. After all, how else
will you learn from your mistakes? We
all have the tendency to get frustrated
by our losses––and maybe even overly
prideful with our wins. Understanding
the mental side of trading plays a big
part in your long-term success.
In this issue’s feature article, we’ll
explore how emotional responses
impact your trading performance. More
specifically, we’ll review some common
emotions traders go through, like anger,
fear, pride and greed, and offer some
strategies you can use to correct them.
For our Q&A this quarter, we spoke with
mental game coach and author Jared
Tendler, who's worked with people of
all professions, from traders to golfers
and even champion poker players.
With three highly acclaimed books that
lay out proven techniques, including
his latest work, "The Mental Game of
Trading," Jared has helped hundreds of
professionals solve their mental game
problems and perform at their highest
levels.
And in the latest edition of Good Trade/
Bad Trade, IBD® Market Research
Director Justin Nielsen gave us a
breakdown of two of his recent trades.
Justin locked in some sweet profits on a
high-performing yet volatile solar stock
leading its group. On the flip side, he
played with fire and let the desire for a
revenge trade on a chip giant get the
best of him.
As always, if you have any questions
or comments about your investing
research or any MarketSmith features,
please call one of our product coaches
at (800) 831-2525 or email us at
marketsmith@investors.com. We’re
here to help you make more money in
the market.
Best returns,
The MarketSmith Team
MarketSmith.com 2022 Q4 Stock Guide 3
4
Nasdaq Composite
Nasdaq Composite (0NDQC) Average Daily Volume 4,574,760,000 Last Updated: 4:00 PM ET 10/24/22Volume 47,446,300 +4% $10952.61 +92.89 +0.86%
I nde x
Scale

16212.23
16053.39
15901.47 16000

0S&P5 15000
14931.06
14860.04 14646.90
14509.56

14181.69
14000
Market Chart Nasdaq Composite

2022 Q4 Stock Guide MarketSmith.com

13181.09
13094.65 13000

12587.88
12555.35
12320.12 12270.19
12000

11230.44

11035.69 11000

10565.14
RS

10000

9.4B
8.1B
Volume(00)
7.6B
7.0B 6.9B 7.2B 74,900,000
6.6B 6.6B
5.8B 59,700,000

47,500,000

37,900,000

08 22 05 19 03 17 31 14 28 11 25 11 25 08 22 06 20 03 17 01 15 29 12 26 09 23 07 21 04 18 02
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Quotes delayed 20 minutes . Owners hip data provided by Refinitiv and Es timate data provided by FactSet. markets mith@inves tors .com © 2022 Inves tor's Bus ines s Daily, LLC. All rights res erved.

10.24.2022
Table of
Contents
Market Chart...................................................................... 4

Five Emotions That Can Impact Your Trading................... 6

Stock Screen:
Good Stocks in Bad Markets*............................................ 10
Clean Harbors Inc (CLH)............................................... 13

Q&A: Jared Tendler............................................................ 14

Good Trade/Bad Trade: Justin Nielsen.............................. 18

Stock Screen:
Goldilocks Technical Setups*............................................. 24
Catalyst Pharma Inc (CPRX).......................................... 25
Petroleo Bras Sa Ptr Adr (PBR)..................................... 26
Conocophillips (COP).................................................... 27

Features Highlights:
Barron’s 400, Updated Lists and Earnings Alerts .............. 28

*All screen results are computer-generated and were run on October 24, 2022.

CONNECT WITH US

MarketSmith.com 2022 Q4 Stock Guide 5

Feature Article Five Emotions That Can Impact Your Trading

Five Emotions
That Can Impact
Your Trading
As investors, we often get so swept up in the everyday
nuts and bolts of trading—chart analysis, poring over
fundamentals, screening for new trade ideas—that we forget
the mental aspect of trading. When your hard-earned money
is on the line, it’s natural to feel emotions like fear (of losing
your money) or greed (wanting to make easy money quickly).

6 2022 Q4 Stock Guide MarketSmith.com

 Five Emotions That Can Impact Your Trading Feature Article
When it comes to investing, letting
your emotions control your trading can
severely impact your performance.
Your job is to recognize your emotions,
identify the root causes and then
implement strategies to correct them.
Once you’ve corrected the causes
of your emotions, you don’t need to
control them because they’re no longer
triggered. This is a process, and certainly
not an overnight one, but it’s a valuable
goal to pursue if you want to be the best
investor you can be.
Anger can make you feel disengaged
from the market when you should be
watching and researching.
Right now, people are angry at the
market and the performance of their
portfolios. That’s understandable! It's
been a difficult year for active investors,
with small tradeable rallies popping up
amid an overall pronounced downtrend.
When you throw in heightened volatility, it
makes for an aggravating mix.
But when anger makes you say, “Forget
it, I quit,” that means you won’t be there
for the beginning of the next uptrend––
and there’s always another uptrend
coming. The early days of a new bull
market are when leading stocks make
some of their biggest gains.
If you miss these giant moves because
you're frustrated and mentally checked
out, you’ll be even angrier than if you
kept your powder dry, stayed mostly in
cash and spent time searching for new
leaders. With the market entering Q4 still
searching for a bottom, it’s only a matter
of time. Your job is to be ready with a
watchlist of quality names showing:
• Big double- or triple-digit earnings and
sales growth
• High relative strength, preferably with
the relative strength line at a new 52-
week high (indicated by a Blue Dot in
MarketSmith)
• A proper setup for a breakout (e.g., a
base pattern)
Fear leads you to buy the wrong
stocks or get shaken out of the
right ones.
Fear is another common sentiment in
the market this year. Whether it’s interest
rates and the Fed, a painful recession or
geopolitical instability, there’s plenty of
fear of uncertainty to go around.
While it’s a good instinct to be wary of
uncertainty and volatility, you have to
recognize that the ultimate arbiter of
market health is the price and volume
action on the chart. You can’t predict
the future, but you can watch the chart
action and act accordingly.
MarketSmith.com 2022 Q4 Stock Guide 7
Feature Article Five Emotions That Can Impact Your Trading

FOMO buyers
here at $70

How do they
feel here at $7?

s Pictured: AMC Entertainment Holdings (AMC), a stock where buyers that

were late to the game got burned.

Fear can also rear its head when you’re
holding a stock but get shaken out too
early and miss out on big gains. After
a stock breaks out and starts rising in
price, many of the best leading stocks
tend to pull back. Perfectly good stocks
often dip in value and retest buy points
or 10-week moving average lines. At this
point, many investors get impatient or
scared that the breakout has failed, so
they sell prematurely.
shakeout and wait for the stock to
continue its breakout.
In stronger markets, a different type of
fear can hurt you: the fear of missing
out or FOMO. You might notice a stock
skyrocketing in price, sometimes spurred
by phenomena like short squeezes,
IPO hype or the “meme stock” bump.
Because who doesn’t want to make 50%
or more in a few days?

If you buy within 5% of a proper buy The problem with buying stocks after big
point (the blue shaded area on a price jumps is that you’re likely already
MarketSmith chart) and stick to your too late to the party. And these giant
trading rules, you can ignore the moves often lack a proper technical

“Just because you made money on a trade doesn’t mean your

process was necessarily good, and if you lose money on a trade,
it doesn’t mean your process was bad."

8 2022 Q4 Stock Guide MarketSmith.com

 Five Emotions That Can Impact Your Trading Feature Article
setup and/or the fundamental qualities
that spur large, sustained price moves.
So if you miss the initial pop, wait and
see if it presents another proper setup––
most times, after the “sugar high” fades,
the stock will fall back down to earth
almost as quickly as it took off.
Greed leads to holding too long when
you should have taken profits.
We all want to prosper in the market. But
holding on to every stock and waiting for
a triple-digit move runs counter to how
the market works.
Research shows that most quality growth
stocks run up, on average, 20-25% after
a breakout from a base before they need
to “take a break” and consolidate gains.
If you sell at least some of your position
at 20-25% above the pivot point (the
shaded green zone in MarketSmith), you
can lock in your gains and move on to
the next stock breaking out.
Alternatively, in strong uptrends when
conditions are more favorable, you can
use the 50-day moving average line (or
its weekly equivalent, the 10-week line)
as your sell signal to stay in a stock
beyond 20-25%. It can help you capture
bigger moves, but it can also lead you to
give back big chunks of your unrealized
gains. That’s why it’s good to take
profits into strength along the way.
The old adage still stands: bulls make
money, bears make money and pigs
get slaughtered.
Pride makes you rationalize losses and
prevents learning from mistakes.
Just because you made money on
a trade doesn’t mean your process
was necessarily good, and if you lose
money on a trade, it doesn’t mean your
process was bad. It’s important to realize
that pride can be one of the biggest
disruptors of a rules-based investing
system you’ve worked hard to develop
and implement.
For example, if you ignored your buy
and sell rules but secured a reward
nonetheless, you’re likely to internalize
the belief that you have good “gut
instincts.” Who needs rules when you’re
suddenly the best stock trader since
Jesse Livermore?
Conversely, have you ever bought
a stock thinking it’s going to be the
next monster to dominate the market,
and then it falls and you take a loss?
Pride can lead you to rationalize your
mistake and stubbornly cling to your
original thesis. This can lead to “revenge
trading,” where you get back into the
stock just to prove that you were right
about it.
MarketSmith.com 2022 Q4 Stock Guide 9
Feature Article Five Emotions That Can Impact Your Trading
The fact is, the market dictates the
winners and the losers. You have to
follow the price and volume action, and
if the trade isn’t working, you swallow
your pride and follow your rules. The
market can and will humble even the
greatest investors, so it’s best to check
your ego at the door and study your
trades with an eye toward what you
could improve.
Hope makes you hold onto stocks that
you should have sold.
The worst thing you can do is hold onto
a losing stock and try to “hope” it back
up. Sure, you’re down 10% already…but
it’s such a good stock, and you did all the
analysis, so this must be temporary.
The fact is, stocks trending lower tend
to continue lower for some time, during
which holders and “hope-ers” may have
to sit through sizable losses.
Fortunately, there is an easy way to
avoid the hold-and-hope trap: Have
a no-questions-asked sell rule for
cutting losses and stick to it. You don’t
necessarily have to set a stop-loss
For a demonstration of post-analysis and some helpful tips from the MarketSmith
coaches, check out our exclusive webinar at investors.com/PostAnalysis
10 2022 Q4 Stock Guide MarketSmith.com
with your broker, but make sure to set
price alerts in MarketSmith so you’ll
immediately be aware when you need to
cut losses and take action.
So What Can You Do?
Follow a rules-based system: If you
follow set rules around when to buy and
sell, your subjective emotions don’t even
enter into the equation. For example,
in How to Make Money in Stocks,
William O’Neil wrote that he follows a
non-negotiable rule to cut losses at
a maximum of 7-8% below the price
he paid for a stock––no exceptions.
Following rules like this makes it easy to
execute trades quickly and according
to plan, plus you don’t freeze up in a
critical moment when it’s time to act.
It’s important to tailor your rules to
your trading style and personality. For
example, if you’re a shorter-term swing
trader, you may want to have smaller
profit targets and tighter stop-losses,
like 10% and 3%, respectively. This
works because you’re making more
frequent trades and holding for shorter
periods, so the compounding effect
works in your favor.
 Five Emotions That Can Impact Your Trading Feature Article

“Post-analysis is the key to recognizing when emotions are interfering

with your trading and hurting your bottom line."

It’s also important to recognize that
you can always improve your rules, so
long as you follow them and analyze
the changes to confirm they are indeed
improvements. No single rule is “correct”
for everyone, so if a rule isn’t working
for you, try something else––but do it
consistently.
If you’re noticing the same mistakes over
and over again, it’s important to adjust
your rules accordingly.
Check out our Q&A with mental game
coach Jared Tendler on pages 14-
17 for more strategies you can use to
counteract negative emotions.

Do a post-analysis of your trades: Remember, during rough markets, it’s

Post-analysis is the key to recognizing
when emotions are interfering with your
trading and hurting your bottom line.
Additionally, post-analysis encourages
you to refine your rules and improve your
outcome. It’s like an athlete watching
game film to study what they did and
how they can improve the next time
they’re on the field.
important to preserve not just your
physical capital but your mental capital,
too. Forcing trades and losing money can
leave you depleted mentally, and then
you might not be ready to jump in early in
the new uptrend. So instead, maintain a
positive attitude and work on the mental
aspect of your trading, and you’ll emerge
smarter and stronger than before. n

Start by printing out the charts of stocks

you traded over the past six months. You
don’t have to start with every single stock
chart; you can always pick your 3-5 big-
gest wins and losses, then ask yourself:
• What did my winners have in
common? And how could I have
handled them better?
• What did my losers have in common?
Which emotions led to the bad
outcome?

MarketSmith.com 2022 Q4 Stock Guide 11

Stock Screen Good Stocks in Bad Markets

Good Stocks in Bad Markets

Having trouble identifying leading stocks while the market’s going sideways or
down? Try this screen, which casts a wide net for stocks with strong earnings
growth, an RS line within 5% of a new high and a 95+ Composite Rating.

Screen created by Scott St. Clair, Premium Product Group Manager

COMPANY (SYMBOL) INDUSTRY GROUP COMP RATING

Clean Harbors Inc (CLH) Pollution Control 99

Matador Resources Co (MTDR) Oil&Gas-U S Expl&Prod 99

Pioneer Natural Resource (PXD) Oil&Gas-U S Expl&Prod 99

Vertex Pharmaceuticals (VRTX) Medical-Biomed/Biotech 99

Digi International Inc (DGII) Computer-Networking 99

E O G Resources Inc (EOG) Oil&Gas-U S Expl&Prod 99

Visit Investors.com/MSStockGuide to load the criteria for this and

other Stock Guide screens directly into your MarketSmith screener.

All screen results are computer-generated and were run on October 24, 2022.

12 2022 Q4 Stock Guide MarketSmith.com

 Clean Harbors Inc (CLH)
Clean Harbors Inc (CLH) NYSE Pollution Control (66/197) Average Daily Volume 401,000 Last Updated: -0.05
www.cleanharbors.com 3:59 PM ET 10/24/22 $118.50 -0.04%
PROVIDES COLLECTION, TRANSPORTATION, TREATMENT, DISPOSAL AND SITE DECONTAMINATION OF HAZARDOUS/N… Volume 286,400 -27%
Price
5% to Pivot
Scale

124.33124.49

118.89 119.44 120

0S&P5
115.00

112.19
111.38
110
RS Ra ting
106.71 94
103.87
101.37
100.15 100

90.37
90.25 90
88.80
87.11
↑ ↑ ↑ 85.67 ↑

EPS EPS EPS 83.56 EPS EPS Due

+27% +41% +98% +105% 9 Days
1.3M 81.56
908,500 Volume
805,200 779,800 836,100 839,500
699,100 794,000
569,900
490,000

302,000

186,000

08 22 05 19 03 17 31 14 28 11 25 11 25 08 22 06 20 03 17 01 15 29 12 26 09 23 07 21 04 18 02
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Qtr Ended September 30, 2021 Qtr Ended December 31, 2021 Qtr Ended March 31, 2022 Qtr Ended June 30, 2022 EPS Due 11/2*
1.14 vs 0.90 +27% 0.89 vs 0.63 +41% 0.83 vs 0.42 +98% 2.44 vs 1.19 +105% Earnings ($)

MarketSmith.com 2022 Q4 Stock Guide

951.5 vs 779.3 +22% 1119.5 vs 796.2 +41% 1169.1 vs 808.2 +45% 1356.3 vs 926.5 +46% Sales ($Mil)
+13.6% +14.1% +15.1% +18.8% Return on Equity

13
Good Stocks in Bad Markets Stock Screen

Real-time prices
Real-time prices by Nas
by Nasdaq daq
Last Las
Sale. Real-time Real-time
t Sale. quote quote
and/or trade and/or
prices trade
are not prices
sourced fromare not s ourced
all markets. Ownership
fromdata markets
all provided by. Refinitiv
Ownersand data provided
hipEstimate by Refinitiv
data provided by FactSet.and Es timate
© 2022 data
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Business Daily, by FactSet.
LLC. markets mith@i
All rights reserved.

© 2022 Inves tor's Bus ines s Daily, LLC. All rights res erved.
Q & A A Conversation with Jared Tendler
A CONVERSATION WITH
Jared Tendler
Mental game and performance coach
Jared Tendler works with all types of
people, from Wall Street traders to PGA
golfers and even professional poker play-
ers. His latest book, The Mental Game of
Trading, gives investors a step-by-step
system for mastering trading psychology.
As a licensed mental health counselor
with more than 17 years of experience,
Jared has cracked the code to some of
the biggest mental blockers impacting
performance.
MarketSmith recently sat down with
Jared to talk about his work as a mental
game coach for investors, some strat-
egies he uses to help traders manage
negative emotions and much more.
To start off, can you tell us a bit about
your background and what sparked
your interest in becoming a mental
game coach?
My entry into this space is a classic en-
trepreneurial tale of searching for a better
solution. I wanted to play golf profession-
ally—but I kept choking under pressure
in big tournaments. I was a three-time
All-American in college and won nine
times, but when it came to qualifying
for the U.S. Open or the U.S. Amateur, I
couldn’t perform.
14 2022 Q4 Stock Guide MarketSmith.com
I dove into golf and sports psychology,
looking for answers. What I found helped
me overall—just not when it mattered
most. Reasoning that golf psychology
was missing an understanding of why I
was choking, I decided to put my dream
of playing professional golf on hold and
got a Master’s degree in counseling psy-
chology to figure it out for myself.
After getting my Master’s, I spent another
two years getting licensed as a therapist
and then moved to Arizona to start my
practice working with golfers. After build-
ing a roster of professionals, amateurs
and top juniors, I randomly met a pro-
fessional poker player who needed my
coaching. This introduced me to a whole
new clientele that desperately needed
mental game assistance, but no one was
helping them!
Once I started coaching poker players, I
quickly found myself working with many
of the best players in the world. I wrote
my first book, The Mental Game of Poker,
and soon after, I started hearing from
investors that my poker book was helping

them trade. Recognizing the similarities
between poker and trading, I dove into
the investing world, and eight years later, I
released The Mental Game of Trading.
Although my professional golf aspira-
tions never came to fruition, I did solve
my issues and am now in a spot where
I’m going to try to play in some big golf
tournaments again.
What sort of tactics or mechanisms
do you use to help traders manage
their emotions?
Before I give any specific tips, we need
to be clear on how traders should think
about emotions. Emotions are a signal—
they are not the problem. Of course, they
are part of the costly errors you make—
but they are not the problem. Think about
it this way: if you were walking down the
street and suddenly felt pain in your foot,
you’d be curious as to the cause of the
pain. Let’s assume it was simply a rock
that had gotten into your shoe—the pain
was the signal alerting you to a problem.
The problem was the rock––not the pain.
Similarly, emotions are a signal. The
problems are the faulty beliefs, illusions,
wishes or biases in the back of your
mind, such as expecting to make money
every day, the need to be right, the
illusion of control or the need to make
money now. These flaws are the true
cause of your emotions and what you
need to address.
A Conversation with Jared Tendler Q & A
The best way to start doing that is by
studying your pattern of FOMO, revenge
trading, overconfidence, fear of failure or
greed. You’re an expert in recognizing
patterns in the market, and you need to
be an expert in recognizing the patterns
in yourself.
Your emotional reactions happen again
and again in very similar ways—you can
use that to your advantage. Once you
start noticing signs that your emotions
are on the rise, take action to disrupt
the emotional reaction by doing some-
thing different. Take a walk, restate your
goals, journal for a minute or do some
deep breathing exercises. Do these
before you jump into a position too early
or exit after only making a small profit.
Catching it early on gives you the best
chance of success.
Given what a rough year it’s been in
the market, it’s safe to say that many
traders are experiencing feelings of
fear and doubt. How do you help
your clients get past these particular
emotions?
The first thing to do is rule out whether
the fear and doubt are a byproduct
of weakness in your strategy/system.
Doubt could simply be a signal there’s
something off in your strategy––this
is common if you’re a newer trader
because you don’t yet have enough
experience or even clarity on all aspects
of your strategy. As a more experienced
MarketSmith.com 2022 Q4 Stock Guide 15
Q & A A Conversation with Jared Tendler
trader, it could be a signal that you need
to adjust or be more selective. I’ve had
several clients correct their hesitation
around entries (a common problem
caused by fear) simply by tightening up
their strategy.
Beyond that, you want to analyze the
fears and doubts you bring into the mar-
ket. Look at setups, positions or scenarios
where you hesitate, second-guess or go
against your gut, and analyze the thoughts
that arise. Your thoughts provide clues
to help you identify the flaws and biases
behind your fears. And you can’t correct
your fears until you know what they are.
Have you ever advised your trader cli-
ents to take a complete break from the
market? Or do you think being active in
the market while adjusting your mental
game plan is a better approach?
I’m actually working with a client right
now who’s on an extended break. This
particular trader has never been consis-
tently profitable and has given himself
one more chance to make it work. He’s
doing a lot of analysis and prepara-
tion––both on his strategy and his mental
game––to prepare for the final push.
Aside from an extreme case like this,
traders generally underestimate the
value of time off. It seems wrong to take
even an afternoon off when there is so
much opportunity, but think about how
emotions and fatigue can cloud your
16 2022 Q4 Stock Guide MarketSmith.com
judgment and wear you down. Ideally,
you’d be like a slot machine generating
consistent profits, but you’re human,
and if you’re not in a good mental and
emotional state, you won’t capitalize as
much as you should. Take breaks to clear
and re-energize your mind. How much
depends on the person, but it’s generally
more than you’re taking now.
Traders generally have high hopes
of making lots of money in the
market. They go in ready with all their
strategies and may end up with a mix
of wins and losses. Do you have any
thoughts about traders who have a lot
of hope?
I have a very strong opinion about
hope when it comes to trading: Forget
hope. There’s no place for it. Hope is
an emotion connected to things we
can’t control. If you go into the market
hoping to make a lot of money, you’re no
different than someone buying a lottery
ticket hoping to hit the jackpot. Forget
hope and pour yourself into developing
an edge and controlling the things you
can—like your preparation, decision-
making and recognizing your emotions.
You also work with professional poker
players. Have you noticed similarities
in the mindsets of top poker players
and investors?
Absolutely. Poker and investing both
require an ability to make high-stakes
decisions with incomplete information.

The best of the best in both poker and
investing are just as driven, well-prepared
and competitive as the best athletes in
the world. You have to love what you’re
doing to be the best because it’s hard
to reach that level! It requires long hours,
poring through materials, analyzing your
performance and looking for new ways
to increase your edge—if you don’t love
poker or the markets, you simply won’t
dedicate yourself as much as those
who do.
Another big similarity between poker
players and traders/investors is their
ability to handle bad luck. There are very
few endeavors where you can lose mon-
ey while deploying a profitable strategy.
Maintaining your confidence through
periods of bad luck is a challenge. Suc-
cessful poker players and traders have
mastered the art of knowing when to
keep firing and when to adapt because
something is legitimately not working.
What are some common mental mis-
takes you see people make across all
the professions you coach?
One of the biggest and most basic
mental mistakes is thinking you can
always control your emotions, and it’s
a myth. The emotional system is simply
more powerful than the part of the brain
responsible for controlling your emotions.
You read that right.
A Conversation with Jared Tendler Q & A
If anger, fear or greed become too
intense, you will definitely make emotion-
al decisions. It doesn’t matter that you
know better––your emotions will block
you from translating that knowledge into
action. When emotions become that in-
tense, they’re in control, and you’ll make
the same terrible decisions you’ve made
many times before. That’s why I put so
much emphasis on learning to recog-
nize early signs that your emotions are
rising. I go over a lot of this in my Trading
Psychology Masterclass on my website,
jaredtendler.com.
Finally, what’s the next profession or
group of people you’d like to coach
and help improve mindset and per-
formance? For example, can you help
me become a Michelin star chef? Full
disclosure: I burned toast this morning.
The Dalai Lama is a terrible golfer. No
matter how much you master your
mindset, it can’t replace poor technique
in golf, trading or the kitchen.
I’m not sure what the next group is going
to be yet. I’ve got my hands full with an
influx of new trading clients since the book
came out. I have thought about working
with salespeople. I’ve worked with a few,
and they keep saying how much of a
mental game sales is…we’ll see! n
MarketSmith.com 2022 Q4 Stock Guide 17
Good Trade/Bad Trade Justin Nielsen
Good Trade/Bad Trade
THE TRADER
Justin Nielsen
IBD Market Research Director
GOOD TRADE:
Enphase Energy Inc (ENPH)
The Timeframe:
June 2022 – September 2022
Stock Background: Solar stocks have
had big moves this year. At the time of
this trade, solar was a top-ranked
group, and Enphase showed a lot of
leadership action.
Enphase had been on my watchlist for
a while, but what's frightening about
ENPH is its volatility. In just a few weeks
before I bought it, it had climbed from
128 to 217––that’s a 70% move in about
a month’s time!
Even though ENPH had taken a hit
in early 2022, it started to make a
comeback and form a double-bottom
base. In mid-May, the solar industry
group was ranked 184 out of 197; by
June, it had moved up to 83. That’s a
group move that got my attention. As
IBD research shows, industry group and
sector moves make up almost 50% of a
stock’s price movement, so you should
18 2022 Q4 Stock Guide MarketSmith.com
always pay attention to a stock’s fellow
group mates.
By the follow-through day on June 24,
2022, ENPH had some of the best
fundamentals in the group, with double-
digit earnings and sales growth.
Technical Picture: ENPH started
forming a double bottom base in April
2022, eventually breaking through
the 192.90 pivot point on 5/31 before
reversing lower intraday and closing below
the pivot. A rollercoaster ride over the next
two weeks led to a double-digit gain from
the pivot point at one point, followed by
a plunge below the 7-8% stop-loss zone
(shaded in pink on MarketSmith).
At that point, I was just happy I didn’t
buy on the breakout day—here’s another
example of ENPH’s famous volatility. But
why didn’t I make that buy? Because it
would have meant buying it after such
a big move in a short time. Instead, I
wanted to see it go sideways for a bit
and digest those gains.
My Buy Point: June 30, 2022 at 198.
ENPH came down from the pivot and
tested the 50-day line. Then we got a
follow-through day on June 24, which
had me looking for some good setups
to test the waters and increase my

exposure. ENPH was showing strength
following another bounce off the 50-day
to rally back into the buy zone. I didn’t
fully trust the market conditions then,
so when I bought ENPH on June 30, it
wasn’t a full position.
How I Held It: There were a few days
when the stock fell sharply at the market
open, but it recovered higher and closed
in the upper part of the range. I set my
alerts at the lows of these gap down
days, but fortunately, they never retested
them, which helped me hold through
these early shakeouts.
On 7/15, the stock went through a
nasty shakeout but made a solid
recovery. The overall market indexes
also started recovering, which gave
the stock a nice tailwind.
I hadn’t been too excited about holding
through earnings this year, but in this
case, I had a 10% cushion to withstand
a potential hit, and the solar group
was cranking at #3 of 197. ENPH was
showing leadership, which gave me
the conviction to hold. I got my reward
for holding when the stock gapped up
17.9% after the earnings announcement.
On 7/28, I was up about 40% from my
buy point, so I sold /3 of my shares at
1
280. The stock was still going strong, so
part of me wanted to wait for a bigger
Justin Nielsen Good Trade/Bad Trade
move. I used the 21-day exponential
moving average as my line in the sand
to close the whole position while selling
some shares into strength along the way.
My Sell Point: September 1, 2022 at
275. Speaking of the 21-day line: ENPH
closed just below it on 9/1, so I sold
whatever shares I had left. Granted, at
a lower price than I’d had the month
before, but that can happen when you
try to hold for a bigger move. ENPH later
made another crazy move up to 324 but
retested the 21-day line and crashed to
the 250 level. You know what they say
about flying too close to the sun––just
ask Icarus.
My 3 Takeaways:
• Sell into Strength: Take some of
your shares off the table and sell into
strength! You don’t have to sell your
full position, but no one ever went
broke taking profits.
• Follow the Leaders: Stick with
leading stocks in leading groups––
they’ll be your biggest winners.
• Proceed with Caution: Volatile
stocks can be much more challenging
to handle, so make sure you know
your stocks’ volatility profiles and
handle them accordingly. Or avoid
them if that’s not your style.
MarketSmith.com 2022 Q4 Stock Guide 19
Good Trade/Bad Trade Justin Nielsen
BAD TRADE:
Nvidia (NVDA)
The Timeframe:
December 2021 – January 2022
Stock Background: This is a stock I’ve
played several times. Nvidia is a great
company that made a name for itself by
creating sophisticated semiconductor
chips that can conduct trillions of
calculations per second, which is crucial
for gaming and cryptocurrency mining.
After the pandemic started in 2020,
bored-at-home gamers and crypto
miners snatched up video cards with
Nvidia GPUs at a feverish pace, leading
to widespread shortages and a resale
market where cards would sell at prices
2-3x above retail. If that’s not strong
demand, I don’t know what is.
In 2021, this megacap was getting a lot
of additional buzz from its possibilities
in the metaverse, even though its chips
were already powering self-driving cars,
AI and machine learning. Needless to
say, Nvidia has irons in several fires in the
future tech space.
I originally bought NVDA in May 2021 and
then added to my position multiple times
in July, August and September 2021.
I sold my whole position in NVDA on a
break of the 10-week line in early October
20 2022 Q4 Stock Guide MarketSmith.com
while it went into base-building mode. I
had a nice profit from May to September
and loved the story, so naturally, I wanted
back in. Unfortunately, I didn’t buy it
during the breakout on 10/22/21, so I
missed out on a big runup to 346 on
11/22/21. NVDA stock topped that day,
the same day the Nasdaq hit its all-time
high—probably not a coincidence for an
index that’s top-heavy in tech stocks.
By December 2021, I had no position in
this market leader, and I was eager to
return to the well and try to make money
on it again. NVDA was a bit of a revenge
trade for me since I missed the October
breakout. In hindsight, it was a little like
me yelling at the stock, “I’ll teach you for
making me a profit!”
Technical Picture: In December 2021,
NVDA had no base to speak of––just a
sloppy sideways-to-down trend. With no
constructive consolidation, I was looking
at a pullback to the 50-day line and a
bounce back above it as an entry point.
NVDA closed down 6.75% on 12/13/21
at the very low end of its range with
+47% average volume, although it was
still above its 50-day line. However,
that cushion above the 50-day line was
disappearing. Had the 50-day line not
been able to offer enough support, I
would’ve expected more weakness and
a continued fall from its boomtime highs.

My Buy Point: December 15, 2021 at
305. On this day, NVDA bounced back
big time from the 50-day line to close up
7.49% at the top of the range––and I was
ready to get back in it. So, I bought a bit
more as it bounced off the 50-day again
on 12/21/21, then added even more on
1/3/22, which was about the same price
as my initial purchase. At this point, I had
accumulated the same number of shares
as I’d had back in September 2021 but
at a much higher price. NVDA quickly
became one of my largest positions,
taking up 13-14% of my total portfolio.
How I Held It: Considering I didn’t yet
have any gains on NVDA, I was a little
nervous about adding more shares. I
came to my senses pretty quickly when
it broke the 50-day line on 1/4/22, so
without waiting too long into the trading
session, I sold half my position at 286.
I realized I wasn’t handling my position
right––I had this great stock, but I’d
missed a big move. I was forcing it by
getting back into a subpar setup that
produced weak price action. But it still
hadn’t hit my 271 stop (which would
make for a 10% loss). I made the mistake
of using a 10% stop-loss on a larger
position size, which is a recipe for getting
hurt. Because my position was too large
for that, I decided to trim it by half and
hold it for a longer move in a way that I
could manage it.
Justin Nielsen Good Trade/Bad Trade
My Sell Point: January 5, 2021 at 280.
The day after I trimmed my position,
things started to get ugly. The Nasdaq
suffered a 3.3% drop, and NVDA
dropped even more (5.76%). I didn’t wait
around until the end of the day to sell
the rest of my position and walked away
with a loss on one of the biggest winning
stocks of the past five years.
My 3 Takeaways:
• Don’t live in the past. I was trying
to capture a move that had already
passed. If you miss the bus, don’t try
to chase after it––just wait for the next
one. You’ll still get where you want to
go eventually––and you’ll end up a lot
less tired and sweaty.
• Size your positions correctly. I kept
adding to my position even when the
stock hadn’t shown any progress.
NVDA quickly became too big of a
part of my portfolio to manage well.
• Don’t average down. Add to a
position when you’re making gains,
and the market is giving you feedback
that you’re correct. Averaging down,
a/k/a “buying on sale,” is a myth that
can really hurt short- and medium-
term traders. n
MarketSmith.com 2022 Q4 Stock Guide 21
 GOOD TRADE: Enphase Energy (ENPH)

Sold 1/3: 280

Good Trade/Bad Trade Justin Nielsen

Bought:

22 2022 Q4 Stock Guide MarketSmith.com

198

Sold remaining
shares: 275
 Justin Nielsen Good Trade/Bad Trade

Sold 1/2:
280
Sold 1/2:
286
Bought: 305
BAD TRADE: NVIDIA (NVDA)

MarketSmith.com 2022 Q4 Stock Guide 23

Stock Screen Goldilocks Technical Setups

Goldilocks Technical Setups

This screen has a couple of loose fundamental requirements like Composite Rating
and SMR Rating, but apart from that, it’s entirely based on technical characteristics
to get a sense of which stocks are “working.” We called it “Goldilocks” because all
the positions of the moving average lines have to be just right—the stock is above
the 200-day line, close to or above the 50-day line and not too extended above the
10-day line. When you add in a strong 3-month Relative Strength Rating, the result
is a smaller universe of stocks in a potential sweet spot.

Screen created by Justin Nielsen, IBD Market Research Director

COMPANY (SYMBOL) INDUSTRY GROUP COMP RATING

Catalyst Pharma Inc (CPRX) Medical-Biomed/Biotech 99

Petroleo Bras Sa Ptr Adr (PBR) Oil&Gas-Integrated 99

Conocophillips (COP) Oil&Gas-Intl Expl&Prod 99

Denbury Inc (DEN) Oil&Gas-U S Expl&Prod 99

Devon Energy Corp (DVN) Oil&Gas-U S Expl&Prod 99

Harmonic Inc (HLIT) Telecom-Cable/Satl Eqp 99

Visit Investors.com/MSStockGuide to load the criteria for this and

other Stock Guide screens directly into your MarketSmith screener.

*All screen results are computer-generated and were run on October 24, 2022.

24 2022 Q4 Stock Guide MarketSmith.com

 Catalyst Pharma Inc (CPRX)
Catalyst Pharma Inc (CPRX) NASDAQ Medical-Biomed/Biotech (6/197) Average Daily Volume 3,564,100 Last Updated: +0.60
www.catalystpharma.com 4:00 PM ET 10/24/22 $14.00 +4.44%
DEVELOPS PRESCRIPTION DRUGS FOR NEUROMUSCULAR AND NEUROLOGIC AL DISEASES AND DISORDERS. Volume 2,340,400 -34%
+62% from Pivot in Price
70 days
Scale

17.22

15.07 15
0S&P5

13.40

29% 12.08
11.67

RS Ra ting 10
99
8.64
8.30
7.58 7.35 7.90 7.42
6.60 7.03 7.11
6.33 6.30 6.15
5.67
5.24 5

↑ ↑ ↑ ↑

EPS EPS EPS EPS

+17% +30% +64% +75%
28.3M
Volume
11,600,000
4.9M 4.4M
3.4M 3.8M 4,750,000
2.7M 2.6M 3.0M
2.1M
1,940,000

796,000

08 22 05 19 03 17 31 14 28 11 25 11 25 08 22 06 20 03 17 01 15 29 12 26 09 23 07 21 04 18 02
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Qtr Ended September 30, 2021 Qtr Ended December 31, 2021 Qtr Ended March 31, 2022 Qtr Ended June 30, 2022 EPS Due 11/9e*
0.14 vs 0.12 +17% 0.13 vs 0.10 +30% 0.18 vs 0.11 +64% 0.28 vs 0.16 +75% Earnings ($)

MarketSmith.com 2022 Q4 Stock Guide

36.0 vs 29.3 +23% 38.3 vs 31.0 +24% 43.1 vs 30.2 +43% 53.1 vs 36.4 +46% Sales ($Mil)
+30.7% +31.3% +33.6% +37.7% Return on Equity

25
Goldilocks Technical Setups Stock Screen

Real-time
Real-time prices
prices by Nas
by Nasdaq daq
Last Las
Sale. Real-time Real-time
t Sale.quote quote
and/or trade and/or
prices trade
are not prices
sourced fromare not s ourced
all markets. Ownership
fromdata markets
allprovided by. Refinitiv
Ownersand data provided
hipEstimate by Refinitiv
data provided by FactSet.and Es timate
© 2022 data
Investor's provided
Business by FactSet.
Daily, LLC. markets mith@i
All rights reserved.

© 2022 Inves tor's Bus ines s Daily, LLC. All rights res erved.
 Petroleo Bras Sa Ptr Adr (PBR)
Petroleo Bras Sa Ptr Adr (PBR) NYSE Oil&Gas-Integrated (28/197) Average Daily Volume 32,147,600 Last Updated: -1.86
www.petrobras.com 4:00 PM ET 10/24/22 -11.59% $14.19
BRAZIL-BASED COMPANY ENGAGED IN THE EXPLORATION, REFINING, P RODUCTION, AND DISTRIBUTION OF OIL AN… Volume 60,494,700 +88%
- 8 % from Pivot in Price
2 days
Scale

16
15.45
20%

0S&P5
14

12.36
12

26 2022 Q4 Stock Guide MarketSmith.com

11.54 11.85
RS Ra ting
Stock Screen Goldilocks Technical Setups

10.58 98
9.83 10
9.64
9.15
8.86 8.93
8.00 8
7.49
7.01 7.27

6.06 6
5.86
↑ ↑ ↑ ↑ →

EPS EPS EPS EPS EPS Due

+999% -51% +999% +111% 10 Days
140.9M
Volume
90.0M 96.7M
87.3M 88,600,000
75.8M
65.7M 63.2M
56.7M
55,700,000
44.9M
35,000,000

22,000,000

08 22 05 19 03 17 31 14 28 11 25 11 25 08 22 06 20 03 17 01 15 29 12 26 09 23 07 21 04 18 02
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Qtr Ended September 30, 2021 Qtr Ended December 31, 2021 Qtr Ended March 31, 2022 Qtr Ended June 30, 2022 EPS Due 11/3*
0.88 vs -0.04 #+999% 0.87 vs 1.77 -51% 2.53 vs 0.03 +999% 2.78 vs 1.32 +111% Earnings ($)
22.3 vs 12.6 +77% 24.1 vs 14.4 +67% 29.9 vs 15.3 +95% 32.5 vs 22.3 +46% Sales ($Bil)
+49.7% +31.2% +41.2% +41% Return on Equity
Real-time
Real-time prices
prices by Nas
by Nasdaq daq
Last Las
Sale. Real-time Real-time
t Sale. quote quote
and/or trade and/or
prices trade
are not prices
sourced fromare not s ourced
all markets. Ownership
fromdata markets
allprovided by. Refinitiv
Ownersand data provided
hipEstimate by Refinitiv
data provided by FactSet.and Es timate
© 2022 data
Investor's provided
Business by FactSet.
Daily, LLC. markets mith@i
All rights reserved.

© 2022 Inves tor's Bus ines s Daily, LLC. All rights res erved.
 Conocophillips (COP)
Conocophillips (COP) NYSE Oil&Gas-Intl Expl&Prod (8/197) Average Daily Volume 7,215,100 Last Updated: +0.65
www.conocophillips.com 4:00 PM ET 10/24/22 $125.14 +0.52%
ENGAGED IN EXPLORATION AND PRODUCTION OF CRUDE OIL AND NATUR AL GAS IN 17 COUNTRIES. Volume 5,655,300 -21%
Price
+8 % from Pivot in 29 days
Scale

124.08

118.39 0S&P5 120

115.47

107.52
RS Ra ting
104.44 104.11
104.76 98
100
98.46
94.93 96.82

92.32
88.77
85.29

80
77.98 78.78
75.96 78.30

↑ 68.24 ↑ ↑ ↑ →

EPS 66.06 EPS EPS EPS EPS Due

+671% +999% +374% +208% 10 Days
22.9M 24.5M
Volume
17.2M 17.3M
15.9M 15.7M 14.6M 16,100,000
13.3M
11.9M 11.9M
10.8M
10,600,000
8.3M
6,950,000

4,570,000

08 22 05 19 03 17 31 14 28 11 25 11 25 08 22 06 20 03 17 01 15 29 12 26 09 23 07 21 04 18 02
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Qtr Ended September 30, 2021 Qtr Ended December 31, 2021 Qtr Ended March 31, 2022 Qtr Ended June 30, 2022 EPS Due 11/3*
1.77 vs -0.31 #+671% 2.27 vs -0.19 #+999% 3.27 vs 0.69 +374% 3.91 vs 1.27 +208% Earnings ($)

MarketSmith.com 2022 Q4 Stock Guide

11.6 vs 4.4 +165% 16.0 vs 6.0 +164% 19.3 vs 10.6 +83% 22.0 vs 10.2 +115% Sales ($Bil)
+12.5% +19.3% +25.2% +31.6% Return on Equity

27
Goldilocks Technical Setups Stock Screen

Real-time
Real-time prices
prices by Nas
by Nasdaq daq
Last Las
Sale. Real-time Real-time
t Sale. quote quote
and/or trade and/or
prices trade
are not prices
sourced fromare not s ourced
all markets. Ownership
fromdata markets
allprovided by. Refinitiv
Ownersand data provided
hipEstimate by Refinitiv
data provided by FactSet.and Es timate
© 2022 data
Investor's provided
Business by FactSet.
Daily, LLC. markets mith@i
All rights reserved.

© 2022 Inves tor's Bus ines s Daily, LLC. All rights res erved.
MarketSmith Features Highlights

FEATURES HIGHLIGHTS

Barron’s 400, Updated Lists

and Earnings Alerts

Barron’s 400 Index List

We’ve added a new “Barron’s 400” report to
MarketSmith. This is a stock market index of
400 public companies in the United States, as
selected by editors and associates of Barron's
magazine, based on fundamental criteria
including return on investment, growth, market
value, profits and cash flow.

Check it out by opening up the bottom List Panel

and going to Reports > Stocks.

Updates to Three Stock

Lists
Recently, we’ve cleaned up outdated
items from RS Line Blue Dot, All RS
Line New High and Bases Forming
premium lists, and implemented a
shorter archiving time logic to make list
results more relevant and concise.

28 2022 Q4 Stock Guide MarketSmith.com

 Features Highlights MarketSmith

Earnings
Reports Alerts
Earnings have become a
quarter-by-quarter game, so
it’s vital to stay on top of your
stocks that could gap up
or down after their earnings
reports. Remember to use the
MarketSmith earnings reports
email alerts. Subscribers can
get Earnings Price Gaps
and Earnings Upcoming
notifications via email by
clicking the Bell icon in the top-right also available through the Open Stock
corner of the chart interface and going Ideas button on desktop/mobile and
to the Event Alerts tab. From there, you the Reports section in the bottom
can check the box next to which alerts List Panel. n
you’d like to receive. The reports are

MarketSmith.com 2022 Q4 Stock Guide 29

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STOCK GUIDE 2022 Q4

STOCK
MARKET
PSYCHOLOGY:
The Mental Side
of Trading