$TQQQ again beats almost all individual stocks–ETF performance since GMI turned green on 11/10/16

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I wanted to examine how the index ETFs have performed since the GMI (my General Market Index) turned green on 11/10/2016.  The GMI components mainly measure momentum in the QQQ so its signals should probably work better for nonfinancial growth and tech stocks contained in the NASDAQ 100 index (measured by the QQQ).

 

This table shows that between 11/10 and last Friday (1/13) the QQQ rose +6.4%, the SPY +4.7% and the DIA +5.6%. Note also, by definition, the leveraged ETFs for the QQQ  rose much more, the QLD rose +13.3% and the TQQQ +20.2%. The really interesting finding in the table is that these leveraged ETF far outperformed most of the individual stocks in these indexes. For example, only 12% of the NASDAQ 100 stocks, 10% of the Dow stocks, and 13% of the S&P500 stocks rose more than 13%.  In other words, the QLD did better than 87-90% of the stocks in these indexes. The triple leveraged ETF, TQQQ, beat about 96% of the individual stocks in these three indexes!  So I again come to the conclusion that if I can pick in advance the 4% of stocks that can beat the TQQQ, then I should do so. However, for most of us mortals, one only has to ride the TQQQ during an up-trend (GMI=green) to beat the pants off of most individual stocks, and it is so much easier to monitor one index ETF than to manage a portfolio of individual stocks……..(I have been accumulating the TQQQ since the GMI flashed green.)

The GMI remains green with 5 (of 6) components positive.

 

 

$QQQ short term up-trend reaches 20th day; GLB: $SHOP; bull markets like sex

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The GMI is at only 5 (of 6) because my 10 day successful new high indicator was negative. Only one third of the stocks that hit a new high 10 days ago closed  higher than they did 10 days ago. When stocks that hit a new high do not continue to rise, it is one sign of potential weakness I track. The QQQ has closed above its 10 week average for 5 weeks but the SPY has done so for 9 weeks. As you know, the tech stocks measured by the QQQ, have just recently revived. In fact, the QQQ last week broke above its high of 120.50 reached in April  2000. The QQQ closed the week at 121.93. So those persons who say they never take a loss because the market eventually comes back are vindicated–if they held on for 16 years! (I wonder how many  of them started out as buy and hope types but panicked  and sold out as the QQQ bottomed at 19.76 in October, 2002 or again at the 2008 bottom at 25.05?)

The fact that the QQQ did close the week above 120.50 is a sign of strength. However, there are a few things about this rally that concern me. I track many statistics each evening after the markets close. I noticed that only 138 of almost 5,000 stocks hit a new high on Friday. This is far below the numbers seen in much of December. On December 5-12, the number of stocks hitting new highs each day ranged from 430-908. The last 5 days the range was 88-306. So while the QQQ may trade at an all-time high, new highs are not keeping up. On Friday, only 39% of all stocks rose, compared to about two thirds of the Nasdaq 100 stocks reflected in the QQQ. So there is tremendous heterogeneity in the way stocks are performing. Maybe, as I wrote last week, it is time for the tech stocks to rally as the other stocks rest. People have made some money and may be more willing to increase their risk to buy the FANG stocks (FB,AMZN,NFLX,GOOGL). Regardless, I must ride the trend until it ends. You know better than to ask me (or anyone else) to predict when that will be. As they say, bull markets are like sex, they feel best just before they end……

Last week a TC2000 alert I had set went off but I did not notice it until this weekend. SHOP convincingly broke above its green line (GLB) to an all-time high, after consolidating about 4 months around its green line. This chart shows a wonderful high volume break-out last week in SHOP,  an IPO from 2015.  SHOP is probably worth looking into as it connects with Amazon. If I bought it I would exit if it returns below its green line.

Here is the GMI table:

$QQQ short trend up-trend faces critical test; $NVDA buying climax, short $FB?

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With the GMI weakening to 3 and its short term up-trend in jeopardy, the general market faces a critical test this week. The QQQ short term up-trend has completed day 16 but is on the verge of turning negative.The averages are oversold and today’s futures predict a strong bounce at the open. So the market may move back from the edge of the cliff.

NVDA’s buying climax and reversal last week gives me pause for thought. They generally shoot the leaders first before the rest of the troops. I am also concerned with the weak chart of a former leader, FB. Here is FB’s weekly chart. If I wanted to short a stock this might be a good candidate. Note that FB is below a level (topping?) 30 week average, suggesting a potential Stage IV decline. And there were several weeks of high volume selling in November. Its 4wkavg<10wkavg<30wkavg, a weak pattern. If it pops this week, FB could present a fine set-up for a longer term short with a put option.

 

While FB’s RWB pattern is gone, it has not yet formed a BWR submarine pattern and has an RWBCount=6 (of 12). I am watching for a close below the lowest long term (blue) average, currently at 114, to suggest a potential BWR pattern. A close above the top average, at 120.49, would negate this bearish pattern. Note FB reports earnings on 1/25, which could trigger a large move.

The GMI and GMI-2 have weakened but the QQQ short term up-trend count could continue with a significant up day on Monday, with a close above 118.86.  2017 should be an eventful and challenging year for all of us traders–like every year!

12th day of $QQQ short term up-trend; $QQQ and $CDW have an RWBCount= 12

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For a long time I have thought that my adapted Guppy charts composed of 13 weekly moving averages provide an excellent method for identifying stocks in a significant up-trend. Six of the exponential averages are red (3,5,8,10,12,15) and 6 longer term averages (30,35,40,45,50,60) are blue. When all the red averages are rising above the blue averages such that there is a white space between them, this constitutes a red white and blue (RWB) up-trend. I also add a 13th average (1) as a dotted line which shows the closing price each week. When all 13 averages line up with each shorter average rising above the next one (1>3>5>8……..60) this constitutes a really strong up-trend. I have created a new indicator that counts the number of averages that are rising above each longer average. The indicator, called the RWBCount, goes from 0-12. This indicator can be applied to both ETFs and individual stocks and in the future I will often provide the RWBCount.  Below is a weekly chart of the QQQ, which has an RWBCount=12. Note that each line is above the next one. The RWBCount for DIA=12 and the SPY=12. So right now all 3 indexes are in very strong RWB up-trends.

NVDA has an RWBCount=12 and has been 11 or more for months. Note how weekly price leads all of the averages up.

There is no way to know when an RWB pattern will end. I strive to  hop on  stocks with an RWBCount=11 or12 when they bounce up off of support and ride them until the trend ends. By the way, 60% of the Dow 30 stocks have an RWBCount=12. The current Dow dogs are: PFE (5), WMT (5), KO (3) NKE (2). Here is what a “2” looks like.

And a stock not in the Dow, GILD= “0”

Get the picture–I call such stocks BWR or submarine stocks and consider them for shorting…

CDW is an example of a stock with an RWBCount=12 that bounced off of support last Friday. I took a position and placed my stop right below Friday’s low. If for any reason CDW declines on Monday so that I am sold out, I will take my small loss–no emotion. (A stock does not have to rise just because I think it should!) On the other hand, if CDW holds Friday’s low, I will ride it as long as its RWBCount remains high (11 or 12). My goal will be to ride the strong up-trend until it ends and not to try to hop off the first time it shows signs of weakness. Why sell a stock in a strong up-trend? If CDW should rise a few percent, I will move my stop up to break-even. Small losses and large gains–that is the way to succeed in this game. The daily chart of CDW is below. Note the recent green line break-out (GLB) to an all-time high and Friday’s bounce up off of the 30 day average (red line) and its lower 15.2 daily Bollinger Band. Earnings are set for release on 2/14/2017.

Here is the RWB chart for CDW. In the near future I will publish a scan for finding stocks with IRBCount of 11 or 12 that are bouncing off of support. You can sign up for access to my free TC2000 scans at wishingwealthblog.com/club.

The GMI remains at 5 (of 6).

 

 

 

Performance of ETFs since GMI turned green on 11/10; $QQQ on verge of GLB

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As this daily chart of QQQ shows, at the close on 11/10 the GMI turned from Red to Green. The table below shows how stocks and ETFs have done since the close on 11/10 through the close on 12/16.

 

If one had bought the following index ETFs at the close on 11/10 one would be up these percentages:

 

The SPY (+3.7%) and DIA (+5.4%) outperformed the QQQ (+3.3%) presumably because the underlying index (NASDAQ 100) contains no financial stocks, which have led the current rally. However, the triple leveraged ETF, TQQQ, as usual, beat all of the regular indexes during this rally, up +10.4%. We again find that that only a few, 10%, of the individual stocks in the QQQ beat TQQQ. In other words, the TQQQ outperformed 90% of the component stocks represented by the QQQ and  83% of those in the DIA and SPY. Yet again, we see how easier it may be to just ride the TQQQ in an up-trend rather than trying to pick in advance the minority of stocks that will beat it. Of course, what goes up 3x as fast also declines 3x as fast…………

The GMI remains at 6 (of 6). Note in the daily chart of the QQQ above, that QQQ is bumping up against its green line, the all-time peak reached in March, 2000. When (not if) it closes above 120.50, it will be a green line break-out (GLB), and only positive for me as long as it stays above the green line.

All GMI components positive; $QQQ near all-time peak; New TC2000 scan for bounces: $CELG

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It looks like we are getting the year end/end of quarter rally that should take us through the end of December. After that, we get to see what a Trump administration will do and how easy it will be for them to manage the government. As the news heats up in January with stories of turmoil within the various factions of the government, it may be a good time for the market to come back down to reality. All of this sounds likely to me, but it is better to remain vigilant and let Mr. Market tell me his likely direction. For now, it is full steam ahead, with the QQQ back above its 10 week average with the DIA and SPY. This monthly chart shows that the QQQ (119.50) is getting close to its all-time high of 120.50, reached in March of 2000. A break through this top on above average volume would be quite a sign of technical strength. Note that the 2000 top came after a vertical rise, and that the current market is not showing similar signs of  irrational exuberance—yet………..

I recently worked on a new scan that I have added to those stored and accessible in my TC2000 Club. If you want to access and run these scans you need to have a TC2000 account and then join my Club. Once you do so my Club will appear in your Library tab. The link to join my Club is: http://wishingwealthblog.com/club/ Just paste it into your browser.

Here is a picture of the conditions stored in this new scan and its name:

 

This scan finds all US Common Stocks which meet 3 conditions. The fast daily 10.4 stochastics has to be above its long daily 10.4.4 stochastics and the fast stochastics must have been <20 in any of the past 2 days. Thus the stochastic is moving up from oversold. The fast stochastic must also be <=50 so it is not too extended above the bounce  and the stock must close above its 50 day average. The second filter requires the stock to have had a minimum 15% increase from its 50 day low at anytime during the past 50 days. This will find stocks that have popped up at least 15% and just bounced from an oversold stochastics. The third filter requires  trading volume of > 100,000 shares the most recent day.

Based on Friday’s close, this scan detected 5 stocks: CELG, MMS, HELE, AVXS, FTV. I then looked over the fundamentals and technicals of each. HELE is in a Stage II decline and I dropped it from further study. Here is the chart of CELG. I like the fact that CELG is also finding support at its lower 15.2 daily Bollinger Band, a pattern not required by this scan but still very promising. As an educational example, the way I might play this set-up would be to buy CELG Monday and place a sell stop below its recent bounce just below $110. Given the focus of this scan on a rebounding stochastics, I would also subsequently sell CELG if/when the fast stochastics closes back below the slow stochastics. Here is the daily chart of CELG. Note the cross-over of its fast stochastics above its slow stochastics and CELG’s recent surge in price after breaking out of a down-trend. I like to buy stocks that consolidate after a large gap up and then move up. Some of the other remaining three stocks from this scan may also merit further research. When I see promising patterns I often tweet about them intraday (@wishingwealth).

The GMI components are all positive. But T2108 is getting close to 80%…..


New $QQQ short term down-trend; $NFLX breaking out? TC2000 scan results: 7 rocket stocks

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Friday marked the first day of a new QQQ short term down-trend. Note, however, that many (about 40%) QQQ short term down-trends end in under 5 days. Both the QQQ, SPY and DIA remain in longer term Stage II up-trends.  The QQQ, however, has now closed back below its 10 week average. These weekly charts of SPY and QQQ show important differences. SPY is climbing its 4 week average (red dotted line) which is above its 10wk (blue dotted) and 30 wk average (red line).  SPY broke out of a multi-week counter-trend decline (purple line) 4 weeks ago.

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In contrast, the QQQ is now below its 4wk and 10wk averages. I can even see signs of a possible head and shoulders top forming. A close below its 30 week average (near 114) would be a sign of major weakness. The disparity between the SPY, DIA and the QQQ is likely caused by the Trump rally’s focus mainly on the infrastructure and financial stocks, not dominant in the QQQ. Once the euphoria of anticipation under-pinning this rally comes up against the reality of Democratic governing, we could face major market weakness beginning in January. The QQQ will likely rally towards the end of December when mutual funds spruce up their portfolios for end of quarter/year reports to their shareholders. Such a rally may be a great time to exit positions or raise stops….

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On Friday I tweeted intraday (@wishingwealth) that NFLX looked like it was breaking out of a consolidation, following its huge high volume spike in the third week of October after it released earnings. A close back below the declining trend line (purple), around 115, would indicate to me a possible failure of the break-out and a reason to exit the trade.

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For those of you who signed up last week to access my Club on TC2000, I just published the scan that produced these 7 rocket stocks (all are above their last green line tops) this weekend. These are stocks with recent EPS change of at least + 90% that  have advanced a lot this year and rose last week on above average weekly trading volume. See if your scan yields these too. (This scan will only yield stocks towards the end of a week because of its requirement for above average weekly volume.)

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The GMI remains at 5 (of 6). The more sensitive GMI-2 is at 1 (of 8), reflecting the short term weakness in the QQQ. Note the huge decline to only 35% of NASDAQ 100 stocks above their daily 12.26.9 MACD signal lines. Time to be especially vigilant.

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