The market up-trend is in place and I am almost 100% invested on the long side in my trading IRA. I am also largely invested in mutual funds in my university pension. This is the time to ride the train and not to fight it. No one knows when the up-trend will end. The idea is to ride it and have sufficient stop losses in place to exit if the trend should convincingly reverse. The GMI is at 5 of 6, having been at 6 at Thursday’s close. There were less than 100 new highs (74) in my universe of 4,000 stocks on Friday, bringing it down to 5. I suspect we will be back to 6 this week. Meanwhile, 84% of the Nasdaq 100 stocks had their MACD close above its signal line, a nice show of strength. The Worden T2108 Indicator is at 88%, near the top of the range it typically reaches. But it can stay above 80% for months.
There are so many growth stocks breaking out that it is now much harder to determine the true leaders. I have been buying call options on QLD (Nasdaq 100 ultra long ETF) and selling cash secured puts on a lot of strong stocks. If these stocks stay flat or continue rising, the puts I sold will expire worthless on August 21st, giving me a nice portfolio gain for the month. Among the stocks on my IBD100 lists that hit a new high on Friday are: PWRD, FUQI, JJSF, CPLA, MFE, LZ, PCLN, ABAX, and INFY.
Hi,
I always look at your website first. I really enjoy it and you have been right more than anyone I read. That includes myself and I have been trading over thirty years. I do have a question though. How do you decide on where to put your stops? It seems everytime I place a physical stop it gets taken out right before the stock skyrockets. I have been placing my stops just below the 8 day exponential moving average. It has always worked great in the past up until a little over a year ago. Volatility has increased and it seems they are gunning for all stops. Thanks for any reply. Keep up the outstanding work. It is greatly appreciated
and it is nice to find someone that shares without charging an arm and a leg. Great trading to you and yours! Randy
Thanks for the very nice comments. I would never use an 8 day EMA, it is too short and subject to whipsaw for me to trade. I like to buy off of a bounce up from the 30 day or 10 week SMA. I spent a long time examining past winners to select these averages. For very short trades in rapidly rising stocks I like the 10 day SMA. Before I use any average for timing, I examine the stock’s recent history to see if that average worked for that stock. Once I buy, I place a stop loss below the bounce. Hope this helps.