The QQQQ rally finished its 6th day on Wednesday. There were 10 new highs and 12 new lows in my universe of 4,000 stocks on Wednesday. IBD 100 stocks (from my lists the past year) at new highs are: SNDA, CPSI, TNDM, ROH, SGP, MYGN and QSII. TNDM and QSII hit all time highs. The T2108 indicator is now at 63%, the highest level since January 13th. The market is not overbought until the T2108 rises to around 75%. So this market could climb a lot higher. The QQQQ remains in a counter trend rally, until it fails or the longer term trend turns positive. I will wait for the GMI to rise to 5 or above before I commit my university pension funds to the market. I have successfully avoided this bear. In the meantime, I trade on the long side in my IRA. I am slowly accumulating QLD as this up turn strengthens.
Dr Wish, I am a beginner and have been enjoying this web site. I don’t understand how to safely put into practice the mechanism for your statement, “I am slowly accumulating QLD as this up turn strengthens”. I’ve looked through the articles on you site, but can’t find the mechanism described. Is it described in one of the texts on your site. The only text I have that might describe it is “How To Make Money in Stocks” by O’Neil. Thanks for your site and any help you can provide, Tom
I am not sure I understand your question. As long as the QQQQ is in an up-trend I go long the QQQQ index by buying the ultra long QQQQ ETF, QLD. How much and how often I buy depends on my willingness to take on risk and how extended the QQQQ is from the moving averages I monitor. I always have a stop loss in case the index violates the moving average.
But Mr Wish, you’ve been saying this is a little rally in a long-term downtrend bear correction! Nevertheless, your indicators FINALLY show uptrend, and you have missed 50% of this rally leg. You had the DOW high volume (that you require for a bottom) since mid February (look at the DOW graph). As one example, I’ve held Allegiant Travel(ALGT 42.99 today) from my entry at $33.00 one month ago! BTW, this stock quadrupled its revenue @ 21% higher. Earnings reached $18.2 million, or 88 cents a share, from $4.8 million, or 23 cents, in the year-earlier quarter. Revenue rose to $122.4 million from $101 million. There are many others like this stock, just to show you have been missing the boat.
My question has to do with the increasing risked amount in a position vs. the stop loss amount. After purchasing a position in QLD do you wait until the amount of the position gained is more than or equal to your possible stop loss amount before accumulating more QLD? Otherwise, your amount risked increases with the same stop loss percentage as you accumulate additional amounts of the QLD. A possible 5% stop loss of an original amount of $10,000 is $500 (10,000x.05), accumulating up say another $5000 now a total 0f $15000 the amount risked is $750 ($15000x.05). How do you protect against this situation a you accumulate more of QLD or do you just take on more and more risk? Thanks, Tom
Tom, one should not keep the stop loss stationary at the same place. What I do is TRAIL the stop loss upwards as the price goes up, and always by the same 5% (or 7%) below current price. Perhaps WISH does that too.
giuse, Thanks for questioning the use of the trailing stop loss.
Dr Wish, Again, I’m a beginner. I’m assuming the use of a trailing stop loss on each amount invested. I’m trying to understand when you add your second amount of QLD as QLD goes higher. Do you wait until the gain from the first amount of QLD invested exceeds the stop loss percentage of QLD before adding the second amount (accumulating up)? Another approach would be to wait until the gain from the first amount invested of QLD exceeds the first stop loss percentage amount PLUS the calculated possible second stop loss percentage amount before investing the second amount (accumulating up).
Thanks, Tom