It's the 1st of February and also the

start of the Chinese Lunar New Year,

which I believe the Vietnamese and the

Koreans do celebrate as well. I think

it's similar to their new year. Anyway,

fun fact. So, this year is the year of

the tiger and I was born in the year of

the tiger and in case you don't know in

the Chinese horoscope, the animal

changes every 12 years. So, this year

I'm 48 years old. So, I was born again

1974 and so now is the tiger year. So,

tiger year is supposed to be

pretty good if you're a tiger. So, let's

see how it goes this year. So, here's a

quick update on the markets. As you guys

know, in my previous videos I mentioned

that

at the start of the year,

the market started on a downtrend after

rallying really strongly

at the end of last year.

Some bullish news for you. From what I

see from the price action, it looks like

for now the correction is over. That's

right and it looks like the bull market

is in full force once again. So, why do

I say that? Well, first of all, if you

take a look at the weekly candles,

you can see that we had a very strong

bullish signal

over here when

the market closed on the on Friday. I

believe it was the 28th. Was it the 28th

on Friday?

The weekly candle closed as what we call

an ice cream bar, which is very similar

to the pin bar except it's kind of like

the pin bar's fat cousin, right? So,

you've got a long shadow and you've got

a body there. So, that's a bullish

signal only if it's at a strong level of

support

and it's also a double bottom, all

right? So, you can see that there was a

support level over here. So, market goes

up, goes down and it goes slightly below

that support.

And this is a very, very common pattern

where we call it a a

double bottom where see people who

bought the market here

traders they would have put their stop

losses right below that previous swing

low. So, what market makers and

algos they manipulate the markets,

right? They push the market down just

enough to hit the stop losses of these

retail traders causing them to sell.

Remember, when retail traders get their

stop loss hit and they are forced to

sell their stock, someone buys the

stock, all right? So, who buys the

stock? The big boys. The market makers

they buy the stock. So, when the big

boys the and the market makers buy the

stock, is that in their interest to push

the markets up again. So, every time the

price goes down, hits previous stop

losses, takes out the stop losses

and you see that it closes back above

that previous swing low with a bullish

candlestick pattern like a pin bar, an

ice cream bar, bullish engulfing

pattern, that is usually a sign that

this current correction is kind of over.

Now, again, it's not 100%

but it's a high probability, right? So,

on on Friday, which was

let's see, 1 2 Yeah, 3 days ago, that

was the first sign of a bottom. And I

told my students, I said, you know what,

there's a kind of like a good chance

that we have bottomed, but I need a

second con- confirmation on the daily

candles.

And we got that confirmation yesterday

on the 31st of January. On the daily

candles, we had a confirmation of the

correction. Why? Because if you take a

look at the daily candles,

you can see that

uh we managed on the S&P close back

above the 200 moving average. So,

whenever the price goes below the 200

moving average

and then

is able to close back above the 200-day

moving average within 5 days, that's a

very strong bullish signal. So, you can

see it went down, right? 1 2, 3, 4, 5.

Within 5 days,

it's back up again, closed back above

the 200 moving average. That's a very,

very strong bullish signal, right? And

again, take a look. This was a previous

swing low, support. And again, look at

that pattern, right? So, takes out the

stop losses of retail traders.

Whoever entered here, put their stop

losses, it took it out. Once stop losses

are taken out,

and retail traders are forced to sell

cuz of stop losses, who buys? Someone

has to buy again, right? So, it's the

market makers who buy, the big boys who

buy, people like me. I've been buying

like crazy, right? So, after buying,

buying, buying, it's time to go up. And

now, hallelujah, looks like we are going

up again. Now again, remember, there are

no guarantees in life, right? It could

always come back down again, but it's a

matter of probabilities. It look like

looks like again, for now,

uh this correction is over, and it looks

like we're going to continue rallying at

least for the next few days.

So,

what does this mean for investors and

traders? Well, first of all, for

investors, I hope that you have been

buying greedily in the last couple of

days.

Because again, as investors, you take

corrections as opportunities to add

shares of great businesses. So, I've

been buying like crazy. I've been buying

Microsoft, Visa, I've been buying

Salesforce,

I've been buying BlackRock. So, I've

been buying all these companies in the

last uh couple of days, and getting them

at really bargain prices.

It's very interesting to

uh look at comments from people. Um and

you know, people always ask this

question, you know, "Should I buy this

dip? Should I buy this dip?" It's always

that question, right? "What if it dips

further? What if it dips further?"

Now, to answer that question, "Should I

buy this dip?"

first you have to ask yourself, are you

an investor

or are you a trader? So, first, let's

talk about investment first, and then

I'll talk about trading in a while,

right? So, first of all, for investing,

should you buy this dip depends on

number one,

what are you buying?

Okay? So, as an investor, remember, when

you buy a stock, you're buying a piece

of an underlying business. Now, if you

buy

a share of an underlying business that's

a that's a great company, that's a

fundamentally great company, it will

always go up. It will always go up

eventually. All right? So, you got to

buy good companies.

So, again, what are good companies? Good

companies are companies that are

actually making money.

They have got a sustainable competitive

advantage.

And so, when companies really make

money,

these dips are great times to buy these

companies.

But, avoid buying companies that are not

making money, that you're buying it

purely for speculation. So, you don't

want to do that, because those may not

bounce back.

You want to buy good companies. So,

again, let me give you a few examples.

I've given many examples in my videos,

but

let me show you again. So, I've been

buying a lot of Adobe. Why? Because it's

a great business. And why is it a great

business? Because it's making money.

Take a look at the financials of Adobe.

All right? So, this is

Adobe. And if you look at

the financials, look at the revenue,

right? So, the revenue is increasing

consistently, which means year after

year after year, they are generating

more sales.

Pandemic or no pandemic, recession or no

recession, high interest rates or low

interest rates.

These are companies that are resilient

and predictable, because they make money

under all circumstances. So, when you

buy these kind of companies, you can

sleep soundly at night. Sleep soundly at

night, all right? So, cuz even if the

share price goes down temporarily, you

know that it doesn't matter, because

it's a solid company. The price will

will bounce back as fast eventually and

go higher, right? So, revenue's going

up, and more importantly, net profit is

also increasing consistently. And the

company has got a lot of cash, right?

It's got a lot of cash, even more cash

than that. Can pay back all its debt

tomorrow and be debt free if it wanted

to. Okay?

And even more important than earnings

would be cash flow.

So, you can see operating cash flow,

free cash flow increasing consistently.

So, these are the kind of companies that

I buy as an investor. Okay?

So, you have to buy this kind of

company. So, I've been buying a lot of

Adobe. I've been buying a lot of

Microsoft, all right? Again, same thing.

Look at Microsoft. Look at the business

of Microsoft, right? Sales going up

consistently every single year, almost

every year.

Profits going up, lots of cash, very low

debt.

And again, increasing

free cash flow.

Another example, I'll give you one more

for now, would be um

Salesforce, all right? So, Salesforce,

again, take a look at the financials.

Great financials, right? Sales going up,

and the profit looks very low in

relation to the sales, but it's not low.

If you take a closer look over here, you

can see, right? Profits increasing,

right?

Uh more importantly, operating cash flow

and free cash flow and a ton of cash,

more than debt.

So, these are great companies that you

want to accumulate during corrections,

during dips.

And again, if you take a look at the

individual companies themselves, if you

look at, for example, Adobe, do you see

the same pattern? Yes, you do. You see

the same uh

double bottom pattern, right? So, again,

if you look at the weekly charts of

Adobe, notice that it's a very strong

support at that orange line, at this 100

moving average. So, it came down, it hit

this same moving average over over very

strong support, and now it's bouncing

back up, right? And again, take a look

at this line over here. You can see this

line

was a previous

resistance turn support. Can you see

this line?

Right? Resistance, resistance,

resistance.

Okay? So, resistance once broken comes

back down, becomes

support, right? So, you can see the

price goes down, and again, what does it

do? It goes below that support level. We

call this taking out stops. Again,

right? Take out the stops and flush out

the retail traders who panic and sell,

and market goes up again, all right?

So, very, very clear pattern on that.

Look at Salesforce,

same thing.

Look at the strong support at the 150

moving average, the green line, right?

Same support over there, coming down,

taking out previous stop losses, and

then pushing it back up again. Another

example would be, again, Microsoft.

Same pattern.

Right? And you can see Microsoft is

very, very

predictable, all right? You can see 100

50 moving average, very strong support.

Every time there's a big correction, the

this always holds. Check it out, right?

So, the 50 always holds, the 50 always

holds

in big corrections, and this time, same

thing.

Hits the 50 moving average. Oops.

Hold on, let me zoom in again.

Yeah.

Hits the 50 moving average,

and again, stop losses are here, placed

by traders. Take out the stop losses,

force retail traders are forced to sell,

market makers pick them up, and they

push the stock up again, right? So,

again, should you buy the dip? First

question is, yes, if you're buying great

companies that are making money. No, if

you're buying companies that are not

making money and are purely speculative.

But people always afraid, but Adam, you

know, what if I buy the dip and it dips

lower, all right? Now, the trouble of a

lot of investors is they always want to

buy at the lowest price, which is

impossible. It is impossible to always

buy at the lowest price. So, if you

always expect to buy the lowest price,

often times you will never buy.

Because as it's going down, you keep

saying it's going to go lower, going to

go lower, right? But sure enough, it

will always reverse up before you buy.

And once it reverses up, you say, "How

can I buy it now when it's higher? I

should have bought then. I'm going to

wait for it to come back down." And it

doesn't come back down. So, in the end,

you never buy, right?

So, the point is

for me as an investor, I never have

illusions that I'll buy at the lowest

price. I never have I I never have these

delusions cuz I know that I can never

buy at the lowest price. After I buy, it

could go lower, but it doesn't matter as

long as I buy near the lows, not at the

lows.

And to ensure that I buy near the lows,

and you know what? I know that no one

can predict the bottom for certainty and

I don't pretend to. So, what I do is

when I buy shares, as a lot of you know,

I never buy at once. I always buy in

stages. I buy in tranches. So, for

example, if I

intend to buy 100 shares of Microsoft,

you know, I don't buy 100 shares at

once. I'll buy 25 shares first.

All right? And if it goes a bit lower, I

buy a bit more. But so, I keep averaging

in my position. So, by averaging in,

after I buy the first time, I mean, buy

more at a lower price, at a lower price.

Or sometimes after I buy, it goes up and

I buy a bit more as it goes up. So, you

get you get an average. So, that's the

point for investing, all right? And when

you invest,

you know, you you take a longer term

view. And sure, it may not go up

tomorrow or next week or next month, but

if you buy a good company that's

undervalued, you know that it's going to

go up uh higher eventually. So, that's

for investing.

Now, how about for trading?

Now, trading is different because

trading is is short-term. You want to

get in, get out within

a week, 2 weeks, a swing trade. So, for

trading, you don't buy while it's going

down, right? You wait for a bullish

confirmation

uh before you enter a trade. So, right

now, there is a bullish confirmation on

daily candles. And for my trades, yes, I

will look for trade setups.

And then I execute the trades using

option strategies like credit spreads or

diagonal spreads, for example. And

what I do is once I see a bullish

confirmation

in the markets, I'll then screen

for potential trade setups. So, one of

the screeners I use uses over here. Let

me just show you an example of my

screener.

Right.

So, this is my slingshot screener.

And this screens uh couple of these

stocks, right? So, one of the stocks

that it screens out is Tesla.

But for trading, it's a bit of a high

price to size a position. So, let's look

at LRCX.

Now, by the way, this was the trade I

already entered a few days ago. All

right? In fact, uh you can see and let

me just show you my chat group. If I

type LRCX,

you can see I already entered this,

right? Um

there.

Right? So, you can see I entered this

on the 29th of January. Okay? So, I

entered this a few days ago already. And

you can see why.

Uh I explained over here.

Right? Take a look.

Right?

So, you can see that I entered right

after this bullish pin bar. All right?

So, the price comes down, it hits this

very strong support level, takes out

stop losses.

And

you can see that it's also hitting the

lower end of the Bollinger Bands, right?

So, Bollinger Bands are oversold. On the

Williams percentage R, it is oversold.

So, I've got two indicators telling me

that this stock is oversold on the

Bollinger Bands,

on the Williams percentage R,

and it's making a double bottom with a

bullish pin bar. So, we call that a

confluence of bullish patterns, right?

So, I was pretty confident that it's

going to start bouncing back up. So,

what I did was I said, "Okay,

um

LRCX bouncing off support level 50

moving average still above 150. I'm

going long." So, I enter a bull put

spread extreme and on LRCX, right? Bull

put spread extreme is basically a credit

spread. So, you can see my trade over

here.

Uh I sold the 450 put and bought the 440

put for a $100 contract credit.

All right. So, that's when I first

entered this on the 29th of January. But

right now, uh you can see since I

entered it here,

right? I got in on this day. So, right

now it's really gone up, but it's still

a valid trade because there's still

quite a way more for it to rise, okay?

And again, this appears on my screener,

okay?

So, let me show you another example

um

that appeared on the screener as well

today

um that's pretty interesting. Let's see.

We've got uh Walmart, okay? So,

Walmart's another one, but earnings are

coming up, so I'm not taking the trade.

So, I avoid trading

stocks where earnings are going to be

announced soon, right? But if not for

the earnings, Walmart would be a trade

I'll take as well. Why? Take a look.

Support, support,

support. Can you see a strong support?

And again, this goes lower than previous

supports taking out stop losses. We call

that a

double bottom.

Taking out stops. And again, you can see

hitting the lower Bollinger Bands,

oversold on Bollinger Bands.

You can see oversold on the stochastics.

Now, you can use stochastics or Williams

R. Doesn't matter, it's the same thing.

Both are oscillators, right? And again,

you can see a very nice ice cream bar

now with a very strong bullish candle

and looks like it's going to pop back up

to at least this resistance at 146.5.

So, a bit of upside to this trade, but

I'm not taking this because of earnings.

It's going to announce earnings in a

while and earnings can screw up the

trade, all right? So, always avoid

earnings in trading. But for investing,

I don't care about earnings. I'm holding

for the long run. I'll just hold it.

Let's see there are there any other

interesting trades

that appeared today?

Um

No, I don't think there are, right? Let

me just take a look at

uh Kelly C.

Now, this one no.

Okay, let me see if there's another one

I saw.

Okay, now this one.

All right, this one could be interesting

as well, right? Uh ADP. ADP. Uh why?

Because again, if you

Let me draw this line over here.

Okay.

So, again, you can see this same

pattern, right? So, this is a previous

swing low. This is it is takes out that

swing low, right? Forces the stop losses

to be hit, closes with a bullish pin

bar, Bollinger Bands

um

lower Bollinger Bands be lower Bollinger

Bands being hit,

uh stochastics oversold. So, again, we

call this a slingshot setup and highly

likely you're going to make a bounce

right here right now. Okay?

So, just sharing how I make my

investment and trading decisions. And

again, looks like for now, the market's

back on the bull mode. Correction for

now looks over. But again, doesn't mean

that this is the only correction for the

year.

There could be many more corrections to

come for the rest of the year and for

the rest of the decade. So, if you

missed out buying great companies during

this correction, don't fret. Be patient

because there will be, you know, coming

corrections as well. But for now, it

looks like we are now back on rally mode

in the US markets. So, have a happy

Lunar New Year New Year and gong xi fa

cai. If you don't know what that means,

if you translate gong xi fa cai, it

means I hope you get rich. And that's

how Chinese people greet each other at

the start of every new year because

we're the most capitalistic uh people in

the world. All right.

So, may the markets be with you and I'll

see you in the next video. If you want

to catch my latest videos, click on the

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We're going to learn how to invest and

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If you want to join my live wealth

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This is Adam Khoo and may the markets be

with you.