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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)
📝 Today, You’ll Learn:
✅ How to recognize a double bottom setup and why it works
✅ The proper buy point and the role of volume in confirming the move
✅ Why O’Neil favored this pattern after bear markets and sharp corrections
✅ Real-world examples of powerful reversals from double bottoms
Markets rarely recover in straight lines. When a leading stock or index bottoms, it often doesn’t do so once—but twice.
That’s the logic behind the double bottom—a bullish base pattern shaped like a “W.”
It’s one of the most psychologically important and reliable reversal patterns in O’Neil’s system.
📖 William O’Neil taught:
“Double bottoms are among the most successful bases—especially when the second bottom undercuts the first. This shakes out weak holders and creates power for the next move up.”
Let’s break this down.
📐 Anatomy of a Double Bottom
The double bottom forms when a stock drops, rebounds, then drops again—but fails to break down meaningfully. Instead, it stabilizes near the first low and reverses back upward.
✅ Key Traits of the Pattern:
Two Distinct Lows
The first low comes during or after a downtrend.
The second low often undercuts the first—this is called a shakeout.
Ideally, the pattern forms over at least 7–8 weeks for reliability.
Volume Behavior
Volume should be lighter on the second pullback—a sign that sellers are drying up.
Breakout volume at the pivot should be 40–50%+ above average.
🎯 The Proper Buy Point in a Double Bottom Pattern
The proper buy point is not at the second bottom. It’s at the pivot, which is:
🟩 The Peak Between the Two Bottoms
This midpoint rally forms after the first low.
It’s the highest point between the two lows.
The buy signal is triggered only when price breaks out above this level on strong volume.
Why? Because this is where the stock proves that the sellers are gone and the uptrend is real.
📖 O’Neil emphasized:
“The buy point is the breakout—not the bottom. Most of your risk lies in acting too soon.”
✅ Buy Point Rules Recap:
Don’t buy the bottom—buy the confirmation.
Watch for volume at breakout: 40–50% above average is ideal.
RS line should confirm leadership by hitting new highs at or before breakout.
📖 Minervini echoed this logic:
“You don’t buy a W just because it looks like one. You buy it when the pivot breaks with conviction.”
📊 Real-World Examples
✅ NVIDIA (NVDA) – 2022 Recovery
First low: ~$110
Midpoint rally: ~$190
Second low: ~$120 (undercut)
Buy point: ~$190
Breakout volume confirmed, launching a 100%+ run in 6 months
✅ Apple (AAPL) – 2004
First low: $6.75
Midpoint: $9.20
Second low: $7.00
Buy point: $9.20 breakout with surging volume
Kicked off a multi-year rally
✅ S&P 500 – 2009 Post-Crash Bottom
Formed a W base during the Great Financial Crisis
March 6, 2009 undercut November 2008 lows
Breakout from midpoint led to a decade-long bull market
📖 O’Neil noted:
“Institutions love patterns that trap emotional sellers. The second undercut often provides the fuel.”
📉 Common Mistakes Traders Make
❌ Buying during the second dip, before the base is complete
❌ Jumping in before breakout confirmation
❌ Ignoring volume clues at the pivot
❌ Buying too late (5–10% above pivot) and missing proper risk/reward
📌 Trader’s Checklist: Validating a Double Bottom
✅ Base is at least 7–8 weeks long
✅ Second bottom slightly undercuts the first
✅ Midpoint rally (pivot) is clearly defined
✅ Volume dries up on the second bottom
✅ Breakout above pivot on 40–50%+ volume
✅ RS line is rising near or before breakout
🎯 Action Step: Find Your Next W Setup
✅ Choose 3 stocks from your watchlist that have pulled back and stabilized.
✅ For each:
Can you identify two distinct lows?
Has the second undercut the first?
Where is the midpoint pivot?
Did volume confirm the breakout?
Set alerts just above the pivot.
Wait for the breakout—and then act with confidence.
🧠 Final Thought:
Double bottoms aren't just chart patterns—they’re psychological battles.
They reveal where the crowd quits—and where the pros step in.
📖 Livermore summed it up:
“The market will test you twice—once to shake you out, and again to see if you’re paying attention.”
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
TECH MOMENTUM CONTINUES — NVDA, TSLA & SMCI LEAD FOUR-DAY WINNING STREAK
Wednesday’s session extended the rally, with the Dow +0.3%, S&P +0.2% and Nasdaq +0.4%. Nvidia added nearly 3% and Tesla logged its fourth straight gain (+1.8%), while Super Micro Computer exploded +16% on its $20 billion AI deal with DataVolt.
Smaller names like Karman Holdings (+7%), Oklo (+11%) and Dynatrace (+4%) also rallied—though Global-E Online struggled (-16%). Growth stocks hovering near buy zones (Booking, Commvault, Robinhood, Roblox) are worth a look as markets ride the AI and tariff-relief tailwinds.
Stock Spotlight
Stock Spotlight: Spotify ($SPOT ( ▲ 4.03% ) )
Streaming Giant Maintains Momentum Post-Breakout
Spotify Technology (SPOT) is currently in a buy zone after breaking out from a double-bottom base with a buy point of $621.20 on May 2. Despite a slight dip following its Q1 earnings report, the stock has found support at its 21-day exponential moving average, indicating sustained investor interest.
Key Facts:
Current Price: Approximately $620.07
Q1 Earnings: $1.16 per share on $4.53 billion in revenue
Subscriber Growth: Added 5 million premium subscribers, totaling 268 million
Monthly Active Users: 678 million
Technical Indicators: Stock remains within a 5% buy zone up to $652.26
Product Update: Enhanced AI DJ feature now accepts voice commands in English across 60+ markets
What Traders Can Pick Up:
Subscriber Growth: Exceeding subscriber expectations can bolster investor confidence and support stock price stability.
Technical Support: Finding support at key moving averages, like the 21-day EMA, can indicate ongoing positive sentiment.
Product Innovation: Continuous enhancements, such as the AI DJ feature, can contribute to user engagement and long-term growth.
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.