Use A Stocks Lifecycle To Your Advantage

May 19, 2025

Building A Long Term Buy And Hold Portfolio Makes Sense

What has never made sense to me, is why live through tough declines and obvious downtrends. They can last for a long time — and dead money are useless.

Everybody Should Have A Buy And Hold Portfolio — With A Twist

Like we are going to build together. Buying quality growth stocks in emerging clear uptrends. Adding to the best performers along the way. And getting out fast when the uptrend turns into a downtrend.

That is how you manage money in a time efficient way.

Stocks Always Move In Clear Cycles

We can reference Wyckoff, Weinstein or O´Neil, it doesn’t matter. The underlying principel is the same.

Stocks consolidate
Breakout to a new uptrend
Pauses in the uptrend and consolidates some more
Continues their uptrends
Form a distribution base
Breaks down and starts a sustained downtrend

If you want to read more on the different phases of a stock, you can check out this past post from The Setup Factory, where I breakdown NVIDIAs lifecycle so far. It has lately started showing life, and it will be interesting if it can change it’s distribution base, into something bullish instead.

The Setup Factory

Free Post - The Chart Tells The Tale - NVIDIA

Stocks move in very distinct phases and patterns. Identifying these is our job as swing and position traders. What mainly moves stocks is institutional and fund sponsorship. By studying and analyzing charts, you can identify the actions of smart money, and align your trading with their agenda. They are like…

4 months ago · 4 likes · The Trading Setup Factory

And here you can read about how to interpret the price action in a trading range, to detect when a stock approaches the point where it might start a brand new uptrend.

The Setup Factory

How do you catch a stock such as Palantir?

7-day Free trial for all subscribers…

5 months ago · 5 likes · The Trading Setup Factory

We Want To Own Stocks In Clear Uptrends

And add to our position when they produce bullish continuation patterns. And we want to sell aggressively when the uptrend fades.

This is buy and hold with a twist.

Buy And Hold Until Things Change

And the chart leads the fundamentals. O´Neils researched clearly showed that stocks usually top, when their fundamentals are the best.

The chart is always leading.

Buy Fundamentally Exceptional Companies — But Only When The Chart Confirms The Thesis

Companies can have exceptional growth and earnings — and still stay dead money for years.

Momentum and technical analysis is a key ingredient, that most money managers omit.

The Chart Is Leading Because Price Is The Only Indicator Of Supply And Demand

If the company is so great, why is there no momentum in the stock? Something will always be missing — if there are more sellers than buyers.

We Will Buy Great Companies When There Is A Clear Asymmetry Between Buyers And Sellers

This is essentially how a breakout works. We will buy stocks breaking out from weekly bases into new uptrends.

The strongest indicator of the start of a bigger move. And a time efficient way of managing money.

All Strong New Uptrends Start With A Significant Breakout From A Multiweek Base

And by using weekly charts, you block out the noise. HIMS, is a great visual example of what we want to buy in this portfolio.

Why hold a stock in a trading range when it is doing nothing. We should enter when we see a significant bullish change of character, to maximize our gains.

Both in percent, but also in the alternate time cost of carrying a dead portfolio with no direction.

Big Weekly Breakouts — Lead To Big Uptrends

And We Want To Add To The Position In A Strong Uptrend If We Get A Chance

And We Want To Sell When The Uptrend Ends

And We Want To Compose The Portfolio In A Smart Way

Rebalancing it to have the most money in the best performers
Focus on the bigger themes and trends
We want to diversify — because it is unwise holding stocks in the same industry groups
When the group weakens, the whole portfolio will turn down
Instead we will choose the strongest stocks in different leading industry groups and sectors

Use A Stocks Lifecycle To Your Advantage

Looking forward to starting the portfolio shortly.

Subscribe to be part of it from the start.

Thank you for reading,

The Setup Factory

Charts from TrendSpider

Disclaimer: The Setup Factory is not licensed to give any investment advice. The content provided in this email and from this Substack-account is my own thoughts and ideas about the stock market. It is for educational purposes only and should not be considered as any form of investment advice. Do not invest in any stock based solely on the information provided here. Trading stocks is highly speculative and involves a high degree of risk of loss. You could lose some or all of your money. You should conduct your own research and due diligence in any investment you do, to verify any information provided.