It takes a long time for the longer term trends to turn up. There were only 7 US stocks at ATHs on Thursday. If the QQQ short term down-trend ends Friday, I might nibble at TQQQ. However, I have found that about 25% of short term up-trends end within 5 days. My 10:30 weekly charts of the major market indexes are still weak. I would like to see the 10 week average cross above the 30 week average and the 30 week average to curve up for me to trust a significant new Stage 2 up-trend has begun. Look at this 10:30 weekly chart of SPY. In prior declining markets the indexes often rebounded back to the 10 week or 30 week average, only to begin a new larger decline. The 30 week average is still declining. Market declines often come after the earnings release period has ended. I do not predict bottoms. I only react after they have formed.
It will take time to learn whether the April bottom will hold. When the GMI turns Green, I will consider long positions again. The dotted line in the chart below is the daily close. The red lines are the shorter daily averages and the blue lines are the longer term daily averages. BWR= red lines below blue lines with a white space separating them.
I find repeatedly that if I can buy TQQQ on Day 1 of a new QQQ short term up-trend and if the up-trend lasts, it beats almost all individual stocks. Similarly, SQQQ beats almost all individual stocks in a sustained down-trend. The key is to buy on Day 1 and hold, but to sell quickly if the trend reverses.
I am so disappointed and angry that social media and the media pundits are, with few exceptions, telling the masses to stay in a declining market. If one got out when I said I was in February, one can just calmly wait out the decline. I do not have to reinvest at the bottom, just return in a new up-trend before the market rises to the point I got out. Stop trying to predict a bottom and wait for it to define itself. Young investors can wait out a decline and keep dollar cost averaging into SPY. People near retirement may not have adequate time. It took 25 years for the DOW to come back to the 1929 top. But the market always comes back……
As to individual stocks, I, like Nicolas Darvas and William O’Neil, buy only when a stock trades at or near an ATH, I am not interested in buying the fallen leaders until or IF they ever trade at an ATH. We never know in advance when a rebound will end. The stocks that reach an ATH early in a market up-trend are proving themselves worthy of my attention and money. With the GMI=0 and RED, I must remain in cash. On Friday there were 4/6119 US stocks that reached an ATH (PM,TATT,ATO,OPOF). When so few stocks trade at an ATH, it is too risky for me to buy one. But they are worth monitoring.
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On May 21, I shall present to the Boston IBD meetup group. The online meeting will be open to all. I will post a link when I receive it. You can register and just watch the recording if necessary.
