14th day of $QQQ short term up-trend

GMI

6/6

GMI-2

7/8

What is the GMI?
 

WORDEN T2108

62%

13th day of $QQQ short term up-trend; $ACAD shoots up

GMI

6/6

GMI-2

8/8

What is the GMI?
 

WORDEN T2108

62%

ACAD, one of Judy’s favorites, had a huge up day (+10.97%) on extraordinary volume.  This monthly chart shows that ACAD recently broke above and re-tested its green line top.  I bought a little and will hold it so I keep an eye on it.  It looks like ACAD is nearing approval of a terrific new drug.

ACADmonthly

 

New Rocket Scan; 12th day of $QQQ short term up-trend; $THRM, $LEA-cup and handle

GMI

6/6

GMI-2

7/8

What is the GMI?
 

WORDEN T2108

63%

One of the best areas of support for a rising stock is its 10 week moving average. A lot of rocket stocks rest there and then resume their rise.  I created a new TC2000 scan that scans over 6,000 U.S. stocks for a strong rocket pattern and a bounce up off of the stock’s ten week average.  This scan gives me a small list of stocks to research further for possible purchase. This weekend’s scan yielded 10 stocks, shown on the right. Rocketbounce10wkscan08312014Two of them, PANW and THRM, have a blue flag on the left column, indicating they have appeared on an IBD50 list or other IBD lists at some point.  I looked closely at THRM (which I own) and found that it appears to have broken out of a cup and handle pattern, a base that occurs in an up-trend. I have labeled this daily chart of THRM to illustrate the pattern’s primary components.  First, there must be a prior up-trend because this is a continuation pattern. Second, there must be a pattern that looks like a side view of a cup and handle.  Then there must be a break out above the top of the handle (blue solid line) on above average volume.  IBD made this pattern famous as one that can lead to a large gain.  As always, however, whether this break-out continues will depend on the general market’s trend. I typically sell quickly if a stock closes back below its 10 week average or if a break-out fails.

THRMcupandhandle

LEA is another cup and handle break-out in the strong auto parts group.

LEAcupandhandle

Meanwhile, the GMI remains at a strong 6 (of 6) and a Buy signal.

GMI08292014

 

11th day of $QQQ short term up-trend

GMI

6/6

GMI-2

7/8

What is the GMI?
 

WORDEN T2108

59%

Weak month of September on the horizon.

10th day of $QQQ short term uptrend

GMI

6/6

GMI-2

7/8

What is the GMI?
 

WORDEN T2108

60%

9th day of $QQQ short term up-trend

GMI

6/6

GMI-2

7/8

What is the GMI?
 

WORDEN T2108

59%

GMI remains at 6 (of 6).

8th day of $QQQ short term up-trend

GMI

6/6

GMI-2

7/8

What is the GMI?
 

WORDEN T2108

56%

GMI remains at 6 (of 6).

7th day of $QQQ short term up-trend; Cramer gets, then loses religion!

GMI

6/6

GMI-2

7/8

What is the GMI?
 

WORDEN T2108

53%

I wrote in In 2009, after many of the stocks that he had advocated had fallen, that Jim Cramer had finally got religion and embraced technical analysis.  For many prior shows he had called chartists “morons.”  He learned the hard way that buying good companies during a bear market was foolish.  Hence his new found respect for chart reading.

I think Cramer slipped back  last week when he listed the performance of a number of stocks that beat GOOG (+799%) in the 10 years since it came public in 2004.  Among the stocks that he mentioned were PCLN (+ 5662%), GMCR (+8448%),  MNST (5619%) and ALXN (+3638%).  The implication was that if one had just held these stocks over the past 10 years one would have done very well indeed.  What could be easier! Just buy great companies and hold on through hell and high water.  What he failed to mention was that each of these stocks experienced sizable declines in this ten year period.  For example, GMCR hit a peak of 115.98 in September, 2011 and then fell to 17.11 by July 2012.  Who in their right mind should have held onto their GMCR through that one year 85% decline from its peak? PCLN experienced a 69% decline from its peak in the 2008 bear market.  And look what the bear did to it in 2000-2002. The person who bought PCLN at the peak in 1999 and held on during that decline would have waited until 2013 to BREAK EVEN!

PCLNmonthly08222014

In fact, all of these stocks experienced one or more large declines during this 10 year period.  If anyone holds a stock through a large decline, there is no guarantee it will come back like these winners did.  Remember Enron or Radio Shack (RSH)? In my opinion, I still need technical analysis to tell me when I should exit even a good company.  Or maybe I am just a moron….

Meanwhile, the GMI remains at 6 (of 6). I am long some stocks in my trading accounts, but I also own puts on these stocks to protect myself against any sudden declines. In 2009, I wrote a tutorial on buying puts for insurance.

GMI08222014

 

6th day of $QQQ short term up-trend

GMI

6/6

GMI-2

8/8

What is the GMI?
 

WORDEN T2108

55%

All of my market indicators remain positive.

5th day of $QQQ short term up-trend

GMI

6/6

GMI-2

8/8

What is the GMI?
 

WORDEN T2108

54%

All of my market indicators remain positive.



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