Welcome to the Beginners in Stock Trading Newsletter! Over the next several months, you’ll receive expert insights, proven strategies, and real-world examples from some of the greatest stock traders in history.
Every newsletter has 2 sections. The 1st section is devoted to learning. Each building on the previous day’s lesson in logical order. Giving you a full, free trading education in under ten minutes a day.
Missed a day? You can find all of the previous newsletters online to catch up or if you joined later.
The 2nd half of the newsletter is a briefing on 1-3 stocks in the news. Read it. Then click on the links to see the corresponding charts inside the original articles. This will accelerate your ability to read the charts.
Learning to how to trade will change your life.
Daily Lesson(each builds onto the next)
📝 Today, You’ll Learn:
✅ What a distribution day is—and how to count them correctly
✅ Why they signal institutional selling and market tops
✅ How William O’Neil used them to raise cash before corrections
✅ What to do when the distribution count gets dangerously high
Opening Thought:
Markets don’t just crash—they crack.
And the earliest cracks appear when the smart money starts slipping out the side door while the crowd is still cheering.
Distribution days are your early warning system.
They’re the single most overlooked signal in trading—but they’re also one of the most powerful.
📖 William O’Neil wrote:
“The majority of your portfolio losses will occur not because of poor stock selection, but because you ignored the signs the market was topping.”
🧠 What Is a Distribution Day?
A distribution day occurs when a major index (NASDAQ, S&P 500, etc.):
Falls 0.2% or more
On higher volume than the previous day
This signals institutional selling—big funds lightening up their positions, not in one dramatic move, but gradually, quietly.
🧭 Why It Matters:
Institutions can't sell all at once—they distribute over time.
Retail traders usually miss this—until it's too late.
A rising distribution count often precedes corrections or full bear markets.
📖 O’Neil again:
“When the market starts racking up distribution, it’s your cue to start playing defense.”
🔢 How to Track Distribution Days
✅ 1. Start a Count for Each Major Index
Track the NASDAQ and S&P 500 separately
Count how many distribution days have occurred over the last 4–5 weeks
✅ 2. Watch for Clusters
1–2 days = normal
3–4 = caution
5+ = serious concern
6 or more = very high probability of correction
✅ 3. Reset Rules
If the index makes a new high, remove earlier distribution days
If a distribution day is more than 25 days old, drop it
If a day is followed by a strong gain on higher volume, you may cancel it
These rules help you avoid false alarms and keep your count objective.
📊 Real-World Distribution Day Warnings
📉 NASDAQ – Fall 2021
October: Index making new highs
But under the surface: 5 distribution days in 3 weeks
Leaders began breaking down
November 2021 marked the top → led to 2022 bear market
📉 S&P 500 – Summer 2007
The index peaked in July
By August, 6 distribution days showed up
Financial stocks led lower
Market ignored it until it was too late
Fall 2007 → Global Financial Crisis unfolded
📖 Jesse Livermore reminded:
“Markets always tip their hand. You just have to stop looking at your own—and start watching theirs.”
🚨 What Rising Distribution Means for You
🟥 The Market Environment Is Deteriorating
Even if prices are near highs, selling pressure is building.
That’s a trap for late buyers.
🟡 Risk-Reward Has Shifted
More distribution means fewer breakouts will succeed, and the odds of failure rise.
The smart move is to tighten stops, reduce position size, or hold more cash.
✅ You Can Stay Safe While Others Get Caught
The greatest advantage of distribution days is early awareness.
You won’t catch the exact top—but you’ll step aside before the pain hits.
📖 O’Neil advised:
“When distribution builds up, stop buying. Start selling weakness—and prepare for turbulence.”
📌 Trader’s Checklist: Tracking and Responding to Distribution
✅ Have I counted the distribution days on the NASDAQ and S&P this month?
✅ Are there 3+ in a two-week span?
✅ Are breakouts starting to fail or reverse quickly?
✅ Are leading stocks breaking key MAs while indexes still look okay?
✅ Is volume increasing on red days and fading on green ones?
If YES to 3 or more, shift defensive.
🎯 Action Step: Begin Your Distribution Log
✅ Create a section in your trading journal or Notion dashboard
For each index:
Date
% decline
Volume vs. prior day
Market context
✅ At the end of each week, log your count and reassess your exposure.
🧠 Final Thought:
Distribution days won’t predict the top to the hour—but they don’t need to.
They whisper the truth before the pain begins.
Listen closely—and you’ll learn when to play defense while others are still swinging.
📖 Livermore said:
“The market does not speak in noise. It speaks in clues. Learn to listen when volume rises and prices stall.”
Train Your Eyes On This Pattern(of the month)
“Double Bottom”
📉 What Is a Double Bottom Pattern?
A double bottom is a bullish reversal pattern that signals a potential end to a downtrend and the beginning of a new uptrend.
It’s shaped like a “W” on a chart and forms when a stock tests a low price level twice, finds support each time, and then breaks out above the midpoint between the two bottoms.
✅ Key Traits of a Double Bottom:
Two Distinct Lows
The second low should occur at or slightly below the first (a shakeout is common).
The time between lows should be at least 3–4 weeks, ideally longer.
Tightness and Volume Clues
The second bottom often occurs on lighter volume, showing selling is drying up.
Watch for increased volume as the stock rises from the second low and especially on the breakout.
Buy Point (Pivot)
The buy signal is triggered when the stock breaks above the peak between the two lows—known as the pivot point.
Volume should be 40%–50% above average on the breakout.
📖 William O’Neil’s Perspective:
“The double bottom is one of the most successful base patterns when formed properly, with the second low shaking out the weak hands and the breakout occurring in sync with a strong market.”
📊 Real Example:
Let’s say a stock drops to $50, rallies to $58, then drops again to $51.
If it then surges past $58 with strong volume, that’s your buy signal—with a pivot at $58.
📊Chart Example:
Use these market tools to scan for and review stocks:
✅ MarketSmith (MarketSurge) – Premium Market Analysis and Scanner Tool
✅ Charts.com – Budget-Friendly Charting Option
✅ TradingView – Free & Subscription Stock and Crypto Charts
✅ DeepVue – MarketSurge Inspired Analysis and Scanner
👀 Seeing real-world stock patterns helps train your eye for long-term trends.
Our Sister Newsletter. Because everyone’s a Beginner in something.
News
STOCK FUTURES RISE SLIGHTLY; MARKET NEARS 'POWER TREND' STATUS
On Friday, May 16, 2025, U.S. stock futures showed modest gains, with Dow Jones futures up 0.3%, S&P 500 futures increasing by 0.2%, and Nasdaq futures rising 0.1%. The market is approaching a "power trend," indicating a strong bullish uptrend, though it is not a direct buy signal. Several notable stocks, including Booking Holdings, Walmart, LandBridge, Boston Scientific, and Tesla rival BYD, are near or at key buy points.
Earnings reports from Take-Two Interactive, Doximity, Cava Group, and Applied Materials led to after-hours declines. Despite an initial dip on Thursday due to concerns like a UnitedHealth probe and earnings disappointments, major indexes rebounded, with the Dow rising 0.6% and the S&P 500 up 0.4%, while the Nasdaq dipped slightly. Investors are awaiting key economic data, including the University of Michigan’s consumer sentiment index, amid inflation concerns and potential tariff policy shifts under President Trump.
Stock Spotlight
Netflix ($NFLX ( ▲ 3.26% ) )
Streaming Leader Highlights Advertising Growth
Netflix (NFLX) has been named the IBD Stock of the Day following a strong presentation during the 2025 upfronts season, where the company highlighted growth in its advertising initiatives. At its third annual upfront event in New York City, Netflix announced advancements in ad technology, new branded partnerships, and revealed that its ad-supported tier now has 94 million monthly active users globally—a 34% increase since November.
Key Facts:
Current Price: Approximately $1,177.98
Ad-Supported Tier: 94 million monthly active users, up 34% since November
Analyst Ratings: BMO Capital Markets and Evercore ISI both maintain outperform ratings with price targets of $1,200 and $1,150, respectively
Upcoming Content: New seasons of "Bridgerton," "Squid Games," "Stranger Things," and "Wednesday"
IBD Lists: Appears on Leaderboard, SwingTrader, IBD 50, and Big Cap 20
What Traders Can Pick Up:
Advertising Expansion: The growth in Netflix's ad-supported tier indicates a successful expansion into advertising revenue streams.
Content Pipeline: A strong lineup of popular shows can drive subscriber engagement and retention.
Technical Positioning: The stock is forming a shelf and a possible three-weeks-tight pattern, suggesting consolidation after a breakout
Refer a friend
5 referrals How to Make Money in Stocks Complete Investing System by O’Neill
10 referrals How to Make Money in Stocks Success Stories by O’Neill
15 referrals How to Make Money in Stocks, Getting Started by Matthew Galgani
30 referrals Trade Like a Stock Market Wizard by Mark Minervini
50 referrals Lifetime access to the upcoming video courses and 50% off live events and digital products
How to Make Money in Stocks Set
Thank you for reading. We’re all Beginners in something!
-Beginners in Stock Trading Team
This newsletter is for educational and informational purposes only. The content herein should not be considered financial advice, investment advice, trading advice, or a recommendation to buy or sell any securities or financial instruments.The strategies, opinions, and examples shared reflect the personal views and historical references from publicly available sources, including the works of William J. O’Neil, Jesse Livermore, Mark Minervini, and other professional traders.Trading in the stock market involves risk, including the risk of losing capital. Past performance is not indicative of future results. You should conduct your own due diligence and consult with a licensed financial advisor or registered investment professional before making any investment decisions.
We do not guarantee any specific outcome or profit. You are solely responsible for your own financial decisions and trading actions.