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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)
What “Sector Rotation” really means — and why the pros watch it like hawks
How to spot a rotation in real-time using daily/weekly price & relative-strength (RS) charts
Classic rotation playbooks from William O’Neil, Jesse Livermore and Mark Minervini
A beginner-friendly checklist to decide whether to shift your own watch-list
Fresh examples: from last year’s energy-to-AI shift to Bitcoin’s newest “handle” formation
Quick Market Recap
Indexes: The S&P 500 and Nasdaq spent the morning red but clawed back to close nearly flat. Volume backed off slightly — a constructive pause after three strong up-days.
Breadth: Advancers edged decliners on both the NYSE and Nasdaq, hinting the rally still has internal sponsorship.
Bitcoin: Hovering near $105 k after printing an intraday high of $107 k. As you’ll see below, that sideways drift just under a record high can be healthy “handle building.”
Deep Dive — “Follow the Money: Sector Rotation for Mere Mortals”
“The market is like a grand parade: watch what float the crowd runs to next.” — Jesse Livermore
1. What Is Sector Rotation?
Institutional money rarely sits still. When a bull move in one industry starts to look mature (extended price, heavy volume “distribution” days, decelerating earnings momentum) big funds quietly lighten up and redeploy into groups showing fresher upside catalysts. The “float” in Livermore’s parade literally shifts.
O’Neil quantified that parade with IBD’s 197 Industry Group RS Rankings. In his studies, ½ to ⅔ of a true market leader’s advance stems from its industry group. Minervini’s modern twist is to overlay the relative-strength line against the S&P 500; when that line turns up for both the group ETF and the individual stock, rotation may already be underway.
2. A Simple 4-Step Radar Screen for Beginners
Step | What to Check | Rookie-Friendly Tool |
|---|---|---|
1 | 4-week RS Rank change of each industry ETF | Free sites (Finviz heat-map) |
2 | Compare daily volume vs. 50-day average on up-days | TradingView “Vol ≥ Avg” flag |
3 | Look for follow-through gains in the third or fourth week | Weekly chart view in MarketSurge |
4 | Verify fundamentals: accelerating sales/earnings | MarketSmith Growth 250 screen |
Livermore-style “Shake-the-Tree” test: After a hot group makes a quick 10–15 % pop, see whether the first pullback is met with roaring support near the 21-day EMA. If volume dries up and price respects that line, weak holders have already been shaken out.
3. Classic Rotations in Action
Cycle | Leaving… | Entering… | What triggered it? |
|---|---|---|---|
2020 → 2021 | Covid “stay-at-home” software | Re-opening travel & hospitality | Vaccine rollout + pent-up demand |
2022 Q4 | Defensive staples & utilities | Energy super-majors | Brent crude’s break over $90 |
2023 Q2 | Oil & gas | AI semiconductor names | NVIDIA’s blow-out earnings surprise |
2024 Q4–Now | Broad AI basket | Select crypto & fintech | Bitcoin’s halving run + ETF approval |
Notice how each “entering” group started exhibiting price outperformance 6–12 weeks before the macro story hit mainstream headlines. That’s institutions moving first.
4. Bitcoin’s Handle — a Live Case Study
Cup: August ’24 peak → January ’25 low → April ’25 return to the old high (~$107 k).
Handle: The last three weeks of tight closes between $99 k and $107 k on drying volume.
Proper buy point (O’Neil): add 0.10 % above the high of the handle ($107 026 × 1.001 ≈ $107 133).
Minervini’s checklist: RS line clearing all-time highs ✔; 10-day SMA ≈ tight to price ✔; prior run up ≥ 30 % ✔.
Whether you trade crypto or cocoa futures, the same pattern psychology applies: large operators digest profits (“handle”) before driving price into fresh high-ground.
Tool Kit — Action Steps
Save a custom “RS Rank Δ” screen: flag industry ETFs gaining ≥ 20 RS points in 4 weeks.
Track distribution days on the S&P 500; three or more in 3 weeks often warns a rotation is near.
Practice marking buy points: Draw a horizontal line across the handle highs of at least five charts (try META, LLY, MSFT, BTC-USD, and NVDA).
Weekend homework: Read Minervini’s Trade Like a Stock Market Wizard, Ch. 4 (“Seek Relative Strength Leaders”) and re-read O’Neil’s How to Make Money in Stocks, Ch. 15 (“Picking the Best Market Themes, Sectors, and Industry Groups”).
Quote of the Day
“It wasn’t luck that made me money. It was always my sitting. Got that? My sitting tight!” — Jesse Livermore
When a new sector begins to lead, the hardest skill is exactly that: sit tight while it works and rotate only when the tape says so.
Train Your Eyes On This Pattern
Cup with Handle
📌 Understanding stock price growth:
Look up the historical stock chart of Apple (AAPL) from 2004 to 2024. Notice how the stock’s price has risen steadily over time with some pullbacks.
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
MARKET PAUSES AS TRUMP SLAMS CHINA DEAL, INFLATION EASES
U.S. indexes hit the brakes on Friday after President Trump accused China of “totally violating” a preliminary trade pact—though he offered no specifics—adding fresh tension to tariff talks. The Dow edged up 0.1%, while the S&P 500 fell 0.4% and the Nasdaq declined 0.6%. On the bright side, the Fed’s preferred inflation gauge (core PCE) cooled to a four-year low of 2.5%, offering a glimmer of relief on price pressures.
Earnings highlights sharpened the market’s mood swings: Zscaler surged nearly 9% on a blowout report, and Ulta Beauty jumped 14% after beating forecasts. Costco also posted solid numbers, while Gap plunged 21% on tariff-driven cost worries. Tesla held firm around a key buy point, buoyed by excitement over its upcoming robotaxi rollout
Stock Spotlight
Cheesecake Factory (CAKE)
Casual Dining Chain Approaches Buy Point Amid Market Resilience
Cheesecake Factory (CAKE) has emerged as a notable contender in the casual dining sector, with its stock trading near a key buy point. The company's performance suggests resilience in the face of broader market challenges, including tariff concerns.
Key Facts
Current Price: Approximately $37.00
Buy Point: $38.00 (cup-with-handle formation)
Year-to-Date Performance: Up 11%
Earnings Growth: Reported a 15% increase in Q1 earnings per share
Revenue Growth: Q1 revenue rose by 10% year-over-year
Industry Ranking: Ranks within the top 5 in the Retail-Restaurants industry group
The stock is forming a cup-with-handle pattern, indicating a potential breakout point at $38.00. Investors are watching for a move above this level on volume at least 40% higher than average.
What Traders Can Pick Up
Technical Patterns: Recognizing chart formations like the cup-with-handle can aid in identifying potential entry points.
Market Resilience: Cheesecake Factory's performance amid tariff concerns suggests strong brand loyalty and operational efficiency.
Industry Positioning: Ranking within the top 5 of its industry group highlights the company's competitive standing.
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.