Dollar Dives and Gold Gets Going–bull market to be Trumped?

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I think my adapted GMMA charts of gold and the dollar tell the whole story. This weekly GMMA chart of the dollar ETF, UUP,  shows a developing BWR (blue/white/red) decline pattern. The six shorter term averages (red lines) are now below the longer term averages (blue lines). The white space separating them is yet to clearly develop. Note the contrast of the current pattern with that from the prior two years.

Screen Shot 2016-05-01 at 1.39.02 PMAnd the gold ETF, GLD, now shows the opposite advancing RWB pattern with a white space developing between the red and blue lines. Again, note the long period the past 3 years when gold was declining and the red lines were consistently below the blue lines.

Screen Shot 2016-05-01 at 1.40.20 PMI will leave it to others to opine about why the dollar is declining. However, a weakening dollar might help international companies when they  convert their foreign earnings into more dollars. But a weak dollar means higher commodity prices and therefore more inflation. Will higher inflation then lead the Fed to raise interest rates and to support the dollar?  Such a scenario of higher interest rates would eventually hurt the stock market. It always has. Regardless, for now, with GLD in an RWB up-trend, it may be advisable for me to hop on the gold train….

In contrast, the GMMA of the SPY shows a gyrating market with the nice RWB pattern of 2014 to mid 2015 clearly over. At some point a persistent RWB or BWR pattern will develop and it will pay to be fully invested with that trend.

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The tech stocks, measured by QQQ,  look a lot more weak. A major decline will be likely if the short term averages (red lines) continue their decline below the longer term averages (blue lines.) A possible head and shoulders top formation is quite evident in this GMMA chart of QQQ.  The downward sloping neckline, caused by the most recent decline having ended lower than the prior decline is considered by technicians to be a major sign of weakness. Regardless of whether a major decline materializes, it is obvious to me that the momentum of the tech stocks is quite different now than we had in 2014 and the first half of 2015. I need to be very careful. It is much easier to profit on the long side when the averages are in RWB up-trends….

Screen Shot 2016-05-01 at 4.13.39 PMAnd almost on cue, the GMI, at 3 (of 6)  and the GMI2, at 1 (of 8)  are telegraphing market weakness. And the QQQ has now closed below its critical 10 week average. With the beginning of the Sell in May period, a possible Fed interest rate hike in June,  and a tumultuous election period on the horizon, this aging bull market may  be about to be Trumped…….

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Critical week for techs and the $QQQ

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Last week the tech stocks under-performed and many high yielding “safe” stocks faltered. This weekly chart of QQQ (the NASDAQ 100 index ETF) shows that the index is resting on its 30 week average (red line). A close below this critical support would be very significant. With AAPL reporting earnings on Tuesday and FB on Wednesday, we will soon see if the QQQ can hold. The QQQ is basically at the same level it was about a year ago. The pattern here could be seen as a head and shoulders top. If the 30 week average turns back down, there could be a significant  Stage IV decline.

Screen Shot 2016-04-24 at 7.35.34 PMWhile the GMI remains strong at 5 (of 6) the more sensitive and short term GMI2 is now at 3 (of 8).

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Earnings begin; will $QQQ break out of its channel?

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Will the market rise with earnings coming?  While reporting companies can blame their past weak results on the strong dollar, maybe they will forecast better results this quarter, with the dollar weakening. The QQQ is in a tight channel.  If this channel fails to hold, I expect support at the lower 15.2 Bollinger Band, around 106.44.  If this level were to fail, I would expect more weakness. But the rising 30 day average (red line) is an important sign of strength.

Screen Shot 2016-04-10 at 6.02.08 PMThe GMI is at 4 (of 6) and still on a Buy signal.

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29th day of $QQQ short term up-trend; weaker dollar = larger profits; 5 successful GLB stocks

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This GMMA chart of the dollar index (UUP) suggests to me that the dollar’s up-trend is over. A weakening dollar implies lower interest rates and more profits for large US international companies that must translate their foreign currency earnings back into dollars. This may be why the market is strengthening— in anticipation of brighter second quarter forecasts to come with the imminent first quarter earnings reports.

Screen Shot 2016-04-03 at 6.24.57 PMBelow are five GLB (green line break-out) stocks that came up in my TC2000 alerts the past 30 days.

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Not all GLB stocks work out but I must admit, most of the recent alerts have worked out. In a rising market, buying GLB stocks breaking to all-time highs can be a profitable strategy. GGG just broke out on Friday. Will it also prove to be a winner?

Screen Shot 2016-04-03 at 6.39.54 PMAnd the GMI table:

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Critcal week for market coming up; GLB: $TFX, $ESLT

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This week there will be more comments from the FED and we will be in the middle of the period when mutual funds dress up their end of quarter portfolio reports for their shareholders. I am therefore expecting strength in the recent winners ( the 4 FANG stocks, FB,AMZN,NFLX and GOOG,  are looking better) for this last week of the first quarter. Then we may get a decline until earnings come out later in mid-April. I do not think this market is in bad shape. Look at this monthly chart of the SPY. Compared to what happened in 2000 and 2007, this market looks pretty healthy.

Screen Shot 2016-03-26 at 8.37.50 PMThis blow-up of this monthly chart since 2013 shows more clearly what has been happening recently.

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While the market has leveled off and we have had a few down months, the market has been resilient. This index would have to break below these recent lows for me to become concerned. So we could see a rising market for the rest of the year. However, we need to remember that the market typically performs poorly during the first term of a new president, and this next president could be  something! All new presidents tend to tighten the budget early in their term so that they can relax things and spend more  to ignite the economy just in time for their re-election campaign…

There were again few new 52 week highs on Thursday, only 49. There were even more new lows than highs. This suggests that buying stocks at new highs and GLBs has not worked out most of the time. One that has, that I have been following is TFX, which had a huge volume GLB around $140 on 2/25 and has not looked back. Note the unusually high volume when the stock broke above its green line top to an all-time high.

Screen Shot 2016-03-26 at 8.54.15 PMThis is exactly the type of price action we want to see when we buy a GLB. But few GLBs have turned out this well recently. It is very important to sell a GLB stock quickly if it does not behave like TFX. ESLT also broke out last week. TC2000 sent me and my students a GLB alert at the open on 3/22, at 91.46. ESLT closed that day at 97.50. Note the large volume on the break-out.

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Meanwhile the GMI is at 5 (of 6) and still on a Buy signal. The GMI2 is only at 3 (of 8) reflecting its very sensitive short term components.

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GMI at 6, going back in, great week! $MXL and $SQ; 11 strong stocks, Get my posts as tweets: @WishingWealth

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My trading account had the best week in quite a long time!  I moved some funds back into an S&P500 mutual fund in my university pension and began buying stocks. I bought some dividend paying stocks as well as promising growth stocks. Most of my purchases have had recent green line break-outs (GLB) to an all-time high. However, I wanted to write about two positions I hold in stocks that are approaching, but not above, their green line tops. The first is MXL, which I believe had  a cup and handle break out last week. The break-out came on above average trading volume. I started a position and will go in much more if MXL can close above its all-time top at 19.50, made in 2010. I usually wait for the GLB, but its fundamental and technical strength tempted me to move early. If MXL closes below its pivot break-out line, around 18.18, I will begin to exit the trade. MXL has very strong IBD stats.MXLcupThe second stock I have been buying is SQ.  It is a recent (11/2015) IPO and my former Apple Genius son and webmaster told me that SQ has a great product for small business owners. My son helps people in the DC metro area to learn how to operate their Apple products. Even technically challenged persons can use the Square square. They make that small square card reader that even Boomer business owners can attach to their phones and accept charge card payments. I bought SQ after I noticed that the stock held up at the bottom line in the chart even when the market had a few large down days in February. About a week after I bought some, Visa announced that they had taken a 10% stake in SQ, a very nice surprise! If SQ can close above its green line top at 14.78 I will aggressively accumulate it.

SQ03202016Here are the results of my TC2000 scan for stocks that have doubled the past year, are near their yearly highs and have a strong long term  monthly RWB pattern.The top 5 with a blue flag to the left appeared in one of my many IBD lists of noteworthy stocks. Like the great trader, Nicolas Darvas, I like to buy stocks that have already doubled and are trading near their all-time highs. These stocks are for educational purposes and research only. Everyone needs to use his/her personal set-up for timing purchases and managing risk. Only a few are GLB stocks. Guess which!

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The GMI remains at 6 (of 6). I am glad there are so many media pundits skeptical of this advance. The market climbs a wall of worry.  I am riding this rise until my indicators tell me to get out. Get my posts as tweets:  @WishingWealth

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