Over the past two days I’ve explained what we do and why we operate the way we do.
Today I want to make it practical – so that when something lands in your inbox, you know exactly how to read it and what to take away from it.
First, a distinction worth understanding: not everything we send is an alert.
Watchlist Posts vs. Alerts – What’s the Difference?
You’ll receive two types of analysis from us, and they mean very different things.
A watchlist post is us saying: “We’ve found something interesting and we’re watching it closely.” The stock has caught our attention – it may be deeply oversold, showing signs of a potential setup, or sitting in a position where the fundamentals and the price are starting to diverge. We’re sharing it early so you can follow along as the situation develops.
Watchlist posts do not mean the setup has confirmed. They’re a heads up, not a signal.
An alert is different. When we issue an alert, it means the setup has moved through our full evaluation process and we believe the risk-reward is compelling enough to bring to your attention with a high degree of conviction. The technicals, the fundamentals, the sentiment, and a specific confirmation trigger have all aligned.
The gap between a watchlist post and an alert can be days, weeks, or sometimes never – if a setup we’re watching deteriorates before it confirms, we’ll tell you we’re removing it from the watchlist and why. That transparency is intentional.
Why does this distinction matter?
Because it changes how you read what we send. A watchlist post is the beginning of a story. An alert is us saying the story has developed to the point where the setup is actionable.
Some subscribers enjoy following the watchlist posts and tracking how setups evolve before confirmation. Others focus primarily on the alerts. Both are completely valid ways to use this newsletter.
Now – here’s how to read our full analyses.
Whether it’s a watchlist post or a full alert, our analyses follow a consistent structure. Here’s what each section is doing and why it matters.
The Setup Summary
Every analysis opens with a high-level snapshot of the situation – what happened to the stock, why the market reacted the way it did, and why we think the reaction may be overdone. Read this first to orient yourself to the story.
The Technical Picture
This section covers what the chart is telling us – oversold readings, key support levels, volume patterns, and historical context. We’re looking for a convergence of signals that suggest selling pressure may be exhausting itself, not just a single indicator flashing green.
The Fundamental Case
This is where we dig into the actual business. Revenue trends, margins, earnings results, and guidance. The central question we’re answering: does the stock price reflect what’s actually happening in the business, or has fear created a disconnect?
This is also where we identify what caused the selloff and whether it’s temporary or structural. A one-time accounting charge is very different from a deteriorating customer base. We make that distinction explicit.
Sentiment and Analyst Positioning
Here we look at what professional analysts think, where institutional money has been moving, and whether broader sentiment has reached an extreme. When 80-90% of Wall Street maintains Buy ratings while a stock sits near 52-week lows, that gap between perception and value is worth examining.
The Risk-Reward Breakdown
Every analysis includes a clear picture of the upside and downside scenarios – the support levels that need to hold, the resistance levels that represent logical targets, and what the setup looks like if things go wrong. We always present both the bull and bear case, because understanding the risk is as important as understanding the opportunity.
A note on how we frame our analysis
You won’t find language like “guaranteed” or “can’t miss” in our work. No setup is certain, and we believe the most useful analysis is honest analysis – one that gives you the information to think through a situation yourself rather than just telling you what to conclude.
When we’re high-conviction, you’ll know it from the weight of evidence we present. When something is on the watchlist but waiting for confirmation, we’ll say that clearly too.
That’s the sequence you’ve just completed.
You now understand what we look for, why we wait for confirmation before issuing alerts, and how to read our analysis when it arrives – whether it’s a watchlist post or a full alert.
From here, you’ll hear from us when we have something worth sharing. We cover losses honestly, not just wins. And when a setup we were watching doesn’t pan out, we’ll tell you that too.
Welcome aboard. I’m glad you’re here.
Steve Direction Alerts
P.S. – Questions about anything you’ve read this week? Just hit reply. I read every response.
Direction Alerts is provided to you for informational purposes only and should not be construed as an offer to buy or sell a particular security or a solicitation of offers to buy or sell a particular security. Direction Alerts may make available certain information related to trading strategies and stock prices for educational and information purposes only; any information made available should not be construed as an endorsement, recommendation or sponsorship of any company or security.
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RJ Hamster 