Three years, 71 trades, and the one credit market signal that explained almost everything
What 71 trades and a Fed indicator taught me about when breakouts actually work
INDEX
I’ll keep it short this week.
We are living through an extraordinary macro environment. The ongoing geopolitical conflict is feeding directly into oil prices, which are feeding directly into inflation — and that chain is what markets are repricing right now.
Photo by Fredrick F. on Unsplash
Given that recent talks produced no resolution, next week is a genuine question mark. The right posture is to stay defensive and patient until there’s more clarity. In the background, liquidity is improving, which should ease credit conditions over the coming weeks. But right now, nothing is more relevant than the price of oil. Let’s see what next week brings.
INDEX
The S&P 500 is showing a meaningful improvement in tone.
On the weekly chart, price rebounded sharply, and breadth confirms this is more than a random bounce. The combined U.S. breadth measure rose to 46.37% — up 8.10 percentage points in a single week — and moved back slightly above its 50-day average for the first time since early February. That’s an important change of character. Participation is improving again after a weak phase.
That said, this should be read as a recovery attempt, not a confirmed bull move. Breadth has improved quickly, but it’s only marginally back above its signal line, and volatility remains elevated. In an environment where oil is the key transmission channel from geopolitics into inflation and rates, one headline can still push the market around sharply. The message is better — but not yet fully trustworthy.
Under the surface, the rebound is uneven. NYSE breadth at 52.56% is notably stronger than Nasdaq breadth at 40.18%, suggesting the recovery is broader in traditional sectors than in growth leadership. That fits the sector picture. Industrials, materials, and parts of technology have improved, but consumer confidence remains fragile — the XLY/XLP ratio is nowhere near convincingly bullish.
The most interesting strength is coming from selected themes rather than from the whole market moving together: semiconductors, space, lithium and battery, infrastructure, solar, and parts of clean energy are showing the best relative momentum. These are the areas most worth monitoring for future leadership if the market continues to repair. Energy remains a longer-term winner, but near-term it’s technically messy — too directly tied to oil volatility and geopolitical headlines.
The takeaway for the next few weeks is simple: the market has improved enough to justify careful, selective testing on the long side — not aggressive exposure. A continued improvement in breadth, especially from Nasdaq participation, would strengthen the bull case. A relapse in breadth would confirm this was just a bounce inside a still-volatile correction.
PORTFOLIOS
10X MOMENTUM PORTFOLIO
My AMD buy stop was triggered last week. I now have 2 open positions in the portfolio. Stop loss levels have been updated in the table below.
Three Years of Breakouts: What 71 Trades Taught Me About Timing, Credit, and Patience
Three years ago, I launched the 10X Momentum Portfolio with $10,000 and a simple idea: find fundamentally strong businesses using adjusted accounting data, then wait for weekly chart breakouts to time entries.
71 trades later, the portfolio has returned +186% — outpacing the S&P 500 by +120 percentage points over the same period.
But the real value of these three years isn’t the number. It’s what I learned about when breakouts work, when they fail, and why.
The Numbers
| Metric | Result |
|-----------------------|----------|
| Total trades | 71 |
| Win rate | 40.6% |
| Average winner | +44.8% |
| Average loser | -11.3% |
| Reward-to-risk | 2.94:1 |
| Expectancy per trade | +$258 |
The Lesson I Didn’t Expect: Credit Direction
Midway through the three years, I started tracking my trades against the NFCI Credit Subindex — the Federal Reserve’s measure of financial conditions.
NFCI spent most of the last three years in positive territory. Yet I had strong winning stretches and losing stretches within that same environment. The level alone didn’t explain the variance. What did explain it was the direction of change.
| Period | NFCI Direction | Portfolio Performance
|---------------------|-----------------|--------------------------
| Apr 2023 – Nov 2024 | Trending DOWN | Strong. Major winners (SMCI, RKLB, ZETA)
| Nov 2024 – Mar 2025 | Trending UP | Weak. Q1 2025: 9 trades, 0% win rate
| May 2025 – Aug 2025 | Trending DOWN | Recovery. Winners returned (FIX, MGNI)
| Aug 2025 – Dec 2025 | Trending UP | Mixed results
When credit conditions were improving — NFCI trending down — breakouts followed through. Buyers stepped in. Momentum sustained.
When credit conditions were worsening, breakouts failed even when the charts looked perfect. The Q1 2025 stretch is the clearest example: technically clean setups, one after another, every one a loser.
I won’t overstate the correlation. This is one portfolio over three years, not a rigorous statistical study. But the pattern was consistent enough that I now check NFCI direction before entering any new position.
The Core Problem: Entry Timing
After reviewing every losing trade, one pattern kept showing up.
The fundamental screening worked. The businesses I bought were genuinely strong — adjusted accounting data helped me avoid value traps and identify real earnings power. The stop discipline worked. I never let a loser run into a disaster. The losses came from one source: entering before the setup confirmed.
Three failure modes accounted for most of the damage:
1. Chasing spikes. ESPR: entered on a +47% week with an 80% upper wick. Lost 35% in two days. CRDO: entered after a 400% run with no consolidation. Lost 19% in six days.
2. Late entries. ACAD: the real breakout came a month earlier; I entered after it had already stalled. META: bought a pullback in an extended stock instead of waiting for a fresh breakout from a base.
3. Premature entries. RKLB in July 2024: entered during the consolidation, hoping for the breakout. Lost 13% in 17 days. RKLB in September 2024: waited for confirmation, entered on the actual breakout. Gained 201% in 78 days.
Same stock. Same fundamentals. Completely different outcomes — determined entirely by entry timing.
What Changes Going Forward
Entry Checklist (all required):
Minimum 6 weeks of consolidation
Weekly MACD crossing above signal line — fresh, not extended
Price above rising 20-week moving average
Breakout candle: 5–20% weekly gain on above-average volume
Upper wick less than 50% of candle range
Macro Filter:
NFCI trending down + SPY above 20-week MA → full position sizes
NFCI trending up or SPY below 20-week MA → reduced sizing or no new entries
Holding Rules:
Minimum 30-day hold unless stopped out
Trail stops at key levels as gains develop
Let MACD signal the exit — not arbitrary price targets
Second Track — Pullbacks: For high-conviction stocks pulling back to support before a breakout:
Half position size, tighter stops
Upgrade to full size if MACD confirms
What I Got Wrong. What I Got Right.
Wrong: I entered too early on several setups — impatience, plain and simple. And I underestimated how much macro conditions shape the outcome of individual trades.
Right: The fundamental screening kept me in quality businesses. Hard stops prevented any single loss from becoming catastrophic. And letting winners run is what generated the returns that offset everything else.
Looking Ahead
The first three years proved the core concept works. Now the focus shifts to consistency — following the rules the data revealed, especially when conditions aren’t favorable. I’ll keep sharing the journey: the trades, the reasoning, the mistakes, and the lessons.
Markets reward patience more than activity. The goal isn’t to trade more. It’s to trade better.
10X DOUBLES PORTFOLIO
I currently have 3 half-positions open. This week I’m adding a new name — one I believe has the potential to double quickly.
Below is the full investment case, the scorecard, and an update on the current open positions.
