Core frameworks used to analyze and trade the stock market — from momentum plays to long-term value setups.
⚠ NFA — Not Financial Advice. Do your own research.— 05 Core Approaches
Ride the momentum. Identify stocks making higher highs and higher lows on strong volume and enter in the direction of the prevailing trend. Use EMA 20, 50, and 200 to confirm trend strength. As long as price stays above the key moving average, you stay in the trade. When it loses the MA on volume — you exit.
NVIDIA (NVDA) — 2023
After crossing above the 50-day EMA in January 2023 at ~$180, NVDA held above it for the entire year. The AI narrative drove it to $500 by June. A trend follower who entered the EMA50 reclaim would have captured a 177% gain by simply holding the trend and exiting only when price lost the moving average.
Price has memory. Key horizontal levels where buyers absorbed heavy selling (support) or sellers crushed buyers (resistance) act as magnets. Map these zones, wait for price to retest them, look for rejection candles, and enter with a stop just below support. Target the next resistance level for your profit exit.
SPY (S&P 500 ETF) — 2022 Lows
The $360 level on SPY acted as major support through Oct–Dec 2022, tested three separate times with clear rejection wicks on the daily chart. Each touch offered a long entry with a stop below $355. The third bounce launched SPY from $360 to $420 — a clean 16% risk-defined swing off a known support zone.
Capture the meat of a move within a larger trend. Look for flags, bull pennants, or pullbacks to the 20/50 EMA on lower volume. Enter when the pullback stalls and price reclaims the prior structure. Hold for 3–20 days and exit at the next swing high or when the pattern's measured move is hit.
Apple (AAPL) — Flag Pattern, Mar 2023
AAPL ran from $150 to $178 in Feb 2023, then consolidated in a tight bull flag for 2 weeks, pulling back to $168 on declining volume. A swing entry at the flag break at $172 with a stop at $164 (below the flag) resulted in a move to $198 within 5 weeks — a 15% gain in 35 days with a defined stop loss.
Enter when price explodes above a consolidation zone or multi-week resistance on heavy volume. The longer and tighter the base, the more powerful the breakout. Volume must confirm — a breakout without volume is a trap. Enter on the close above resistance or the first pullback to the breakout level (the retest).
Tesla (TSLA) — Base Breakout, Jan 2023
TSLA built a tight 6-week base between $108–$125 from Nov 2022 to Jan 2023. On Jan 26, it broke above $125 on 3× average volume after strong earnings. The breakout entry at $128 with a stop below $118 (the base midpoint) led to a run to $220 within 6 weeks — a 72% gain from the breakout level.
Find great businesses the market is mispricing. Analyze P/E ratio vs. sector average, free cash flow, earnings growth, debt levels, and competitive moat. Buy when the stock trades below your calculated intrinsic value. Hold for years — not days. Your edge is patience and conviction when the market is fearful.
Amazon (AMZN) — 2022 Selloff
AMZN crashed 56% in 2022 from $190 to $84 — dragged down by macro fears despite AWS continuing to grow. Fundamental analysts noted that at $84, AMZN traded at a P/S ratio not seen since 2015. Buyers at the $85–$95 zone who held 12 months were rewarded with a return to $180+, nearly doubling their investment, driven purely by mean reversion to fair value.