This Data Defies Wall Street “Wisdom”

Don’t listen to “old sayings”… [TradeSmith Daily]( This Data Defies Wall Street “Wisdom” By Lucas Downey, Contributing Editor, TradeSmith Daily There’s an old adage on Wall Street that goes, “buy the dip and sell the rip.” Intuitively that makes sense. After all, traders are supposed to hunt for bargains… and sell when things get frothy. While this saying is grounded in good intentions, it isn’t supported by evidence. TradeSmith is all about finding solid evidence with provable data. And today, we’ll use data to shed valuable light on whether you should follow this piece of Wall Street wisdom. You see, a new TradeSmith-developed module shows us what to do when stocks put on big winning streaks. As you’ll learn, history shows that “buying the rip” might make a lot more sense… And for this prime example, I’m going to use a company that’s getting a lot of A.I. attention: Super Micro Computer (SMCI). Don’t Sell That Rip The A.I. race has left many investors scratching their heads as they watch a few leaders climb higher seemingly day after day. One of those highfliers is a name I know well — Super Micro Computer (SMCI). If you aren’t familiar with this ultra-growth semiconductor stock, [read this post from a few weeks back](. Back in January I revealed how the company announced breathtaking forward guidance that smashed Wall Street estimates. If you want to see how powerful a beat and raise is for a stock, have a look at the chart of SMCI. The stock has exploded to the tune of 145% in 2024, with the latest zoom propelled by the awe-inspiring positive outlook: Yahoo Finance One look at this chart might have you think buying this stock today is surely a fool’s bet. That could be true… There’s no telling what’ll happen in the future. However, when you consider the rare event that’s happening right now, you’ll think again… RECOMMENDED LINK [All you need is a few $100 to follow this “ChatGPT loophole”]( Venture Capital firms Sequoia Capital, Andreessen Horowitz, Peter Thiel, and more are all over ChatGPT. But according to Venture Capitalist Luke Lango, here’s what they’re not telling you. [Click here now for the details because...]( Lango confirms this “ChatGPT loophole” is open to regular Americans. A 4-Day Win Streak is No Sell Signal SMCI shares have gained for four consecutive days. That’s a major win streak, and something most investors would look at as a sign of overextended frothiness. But TradeSmith recently developed a tool to track both consecutive up and down days in stocks. This early-in-development tool lets us visualize when these rare occurrences have happened in the past… and what happened after. Below details each four-day win streak since 2020, highlighted in green. The most recent streak was last week, on Feb. 8. In total, there’ve been 47 unique signals: The signals are one thing. What they mean going forward is another thing entirely. This same module plots the average forward returns when this signal has triggered in the past. When you study SMCI’s data, you’ll find that big four-day rips aren’t a reason to sell… In fact, history proves those have been bullish trigger-points. Below details what I mean. When you tally all prior four-day consecutive up days for SMCI, here’s the average forward performance: - 1 week later, the stock jumps 0.9% - 2 weeks after, shares climb 3.1% - 1 month post this signal, gains average 4.2% - 2 months later, you’re staring at a double-digit rip of 13% Using data is powerful. It can cut through the noise and emotion that often distracts us. RECOMMENDED LINK [Biden’s Replacement Named?]( Did democrats just name Biden’s replacement for 2024? Louis Navellier predicts [this “shadow candidate” could upend the entire election](. SMCI may in fact be due for a pause soon, but just because it’s climbed four days in a row, don’t let that be your reason to sell. The data shows that strategy doesn’t hold water, historically speaking. Now to be clear, I’m not suggesting you go out and jump into SMCI. This exercise is meant to illustrate how historical perspective can help guide you in uncertain times. Don’t get hung up on Wall Street cliches. Here at TradeSmith we let the data do the talking. And right now, the data says we shouldn’t let a win streak be reason to fear. As I said earlier, I’m familiar with SMCI… And so is [TradeSmith analyst Jason Bodner](. He recommended this stock months back, and anyone who acted on that recommendation is sitting on triple-digit gains. If you’re curious on other names he’s targeting in the weeks ahead, [check out what Jason’s been up to in TradeSmith Investment Report](. He just released a brand-new issue, recommending a company making exponential progress in the health care field. Jason says this company’s revolutionary new therapy was recently approved — and the company is in excellent financial shape. To learn how you can access the newest issue, [click right here to learn more about a TradeSmith Investment Report subscription](. Regards, Lucas Downey, Contributing Editor, TradeSmith Daily Get Instant Access Click to read these free reports and automatically sign up for research throughout the week. [25 Doomed Blue Chip Stocks]( [3 Stocks to Build Your Wealth in 2024]( [5 Unapologetically Profitable Stocks for 2024]( [Download now on the Apple Store]( [Get It On Google Play]( [Customer Support: 866.385.2076](tel:+866-385-2076) | support@tradesmith.com [Request Customer Service](mailto:support@tradesmith.com) ©TradeSmith, LLC. All Rights Reserved. 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