Darvas stocks are currently seeing some of their biggest surges in a very long time. Unlike the 2009 rally, where most of the gains were made by “junk off the bottom” stocks, leading Darvas stocks – the types of stocks that can double and triple in just a few months – are driving this current uptrend.
My personal portfolio of Darvas stocks is up roughly 25% in September alone.
And just in time for this major move, I’m thrilled to announce that Darvas Trader PRO is finally here!
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How many real-life traders resemble Wall Street's Gordon Gekko?
When most people think of a professional trader, several clichéd images probably come to mind.
The first cliché is that of the Gordon Gekko-type alpha-male. The guy who sleeps just a few hours a night and neglects all other worthwhile pursuits (such as health, family, and moral values) in order to win, win, win. They choose the trading life because they thrive on competition and they’ll do whatever it possibly takes to attain another victory.
Another popular image is that of an obnoxious adrenaline junkie. Someone who spends their days trading, their nights gambling, and their weekends racing motorcycles. They’re in the trading game for the excitement, the thrill of taking big risks.
And finally, there’s the clichéd idea of the “math geek” trader. This is the stereotypical “quant,” the guy who spends all waking hours staring at computer screens in a dark room while he tests and re-tests complex equations. This type of trader is seen as a hermit whose only joy in life comes from discovering new mathematical formulas.
There are aspects of these three clichés that are very true. [click to continue…]
I’ll keep this report brief as Monday’s powerful market move speaks for itself, but there are a few points Nicolas Darvas System traders need to be aware of right now.
All three major indexes were up big on Monday (1.74% for the NASDAQ, 1.52% for the S&P 500, and 1.37% for the Dow), but volume was lower across the board compared to Friday’s session.
At first glance, this is a concern. After all, volume powers the big trends and we want to see increased volume pushing this rally higher.
But, if you look a little closer, you’ll get the whole picture. [click to continue…]
Click on chart to enlarge.
There are some Darvas stocks you just have to find a way to own.
On Thursday, I established a position in JKS, a Chinese solar company with unbelievable earnings (up 3,833% in the most recent quarter with projected earnings of 878% next quarter).
This stock opened for trading on the New York Stock Exchange May 14th at a price of $11 a share. Since July, JKS has nearly TRIPLED in price, barely stopping to rest along the way.
Here’s a stock that hasn’t yet established a “sound” base and if you’ve read my book, you know that I advise traders not to take an INITIAL position in any stock that hasn’t set up a base at least four weeks long. Aside from an initial two-month dip after its IPO, JKS has gone almost straight up, never forming a single four-week base.
So why am I buying into JKS now if it hasn’t yet met this four-week minimum requirement? [click to continue…]
Nicolas Darvas sipping a beer while searching for stocks in 1959.
In Nicolas Darvas’ second book, Wall Street: The Other Las Vegas, he wrote the following excerpt. This was written in 1964 and it remains some of the best advice a trend trader can listen to:
“There are traders who live with a telephone in their hand, and at one point in my career this was my situation.
“I was calling my broker literally every fifteen minutes to ask, ‘How’s Lorillard? How’s Polaroid?’
“People with nothing else to do, and a passion for gambling, sit all day in the board rooms of big brokerage houses, watching the ticker, reading news bulletins which may or may not have some effect on the hour-to-hour market, and exchanging rumors. [click to continue…]
Click chart to enlarge.
I mentioned last week that one of the major roadblocks for this market’s rally attempt was the 200-day moving average line. The market reversed on us the last three times it challenged the 200-day monster.
On Monday, all three indexes exploded through this line and ended the day strong. Volume was also higher on all three indexes – another sign of strength.
While we’re not completely in the clear – the indexes could certainly reverse back under the 200-day line just as quickly as they broke through it – it certainly looks like we’re at the beginning of the type of rally Nicolas Darvas would be diving into.
Because we’re still AT THE BEGINNING of this rally (it’s only been 12 trading days since the September 1 follow-through day), it’s important to exercise caution.
This means easing into positions and not getting fully-invested right away. [click to continue…]