Maximizing Gains with Market Timing on $AMC and $GME
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Understanding Trading Strategies
The concept of market timing is essential for effective trading. Here are two primary strategies you can employ:
Short-Term Swing Trading
This approach suggests buying stocks at the next market open when the NYMO indicator trends upward. Conversely, if the NYMO indicates a downward shift, selling should be executed at the following open.
Longer-Term Swing Trading
For longer time frames, if the NYSI shows an upward trend, consider buying at the next market open. If the NYSI declines, it may be wise to either liquidate your positions or short-sell at the next open.
Both the NYMO and NYSI are derived from the McClellan Oscillator, which I believe are excellent indicators of market sentiment, reflecting fluctuations between fear and greed, and guiding market direction.
In essence, most stocks tend to follow the market trends.
Tracking the NYMO and NYSI
On April 12, 2022, we witnessed a downward swing initiated by the NYSI on April 6, which began its trajectory on April 7. In just four trading days, this strategy yielded significant short profits: $1,328 for AMC and $362 for GME, based on each $10,000 invested (as indicated by the white flags on the right axis of the accompanying charts).
April 7 marked the end of an upward swing...
Reflecting back to March 28, with the NYMO capitalizing on its short-term volatility in both AMC and GME—stocks favored by the WallStreetBets community—combined with a solidly rising NYSI, I noted at that time: AMC surged by 94%, and GME skyrocketed by an astonishing 120%. This was just eight trading days ago.
What’s the next move?
Today's substantial gains may signal a potential peak (a "squeeze"?), suggesting this could be the end of the upward trend. However, there are still dedicated fans of these stocks, undeterred by the questionable fundamentals of each company. Yet, as Woody Allen once remarked, when market timing presents such irrational gains, it’s wise to consider cashing out.
It seems the WallStreetBettors may not have heeded that advice; they often hold steadfast in their belief that these stocks will only rise. Previously, when both stocks were on a downward trend, I faced backlash for suggesting they were prime short candidates, leading to bans on Reddit and Facebook for expressing these views.
Consequently, I was absent from their discussions when the market shifted, allowing for profitable swing trades as indicated above, marking the peak of this upward movement.
Despite the noise, the NYMO's short-term swings have recorded notable gains: AMC realized $569, while GME brought in $1,813 for every $10,000 applied to this strategy (highlighted by the white flags on the left axis of the black charts below).
Recently, the NYSI signaled a downturn, indicating a sell-off on today’s open. Nonetheless, the past 15 trading days have been fruitful for both AMC and GME.
Final Profits
During the NYSI's upward trajectory, AMC generated $3,752, and GME achieved $7,936 per $10,000 invested, resulting in returns of 37.5% and 79.5%, respectively (illustrated by the white flags on the left axis of the blue charts below).
While these results may not compare to the immediate gains of selling at the peak, they still represent significant profits. I doubt the WallStreetBettors took the opportunity to sell, as they staunchly identify as “HODLers” for life. It’s worth noting that without selling, their profits remain unrealized since gains in the stock market are only recognized upon selling.
