New QQQ short term down-trend; mainly in cash, and one AZO call

GMI1/6
GMI-21/8
T210822%

The QQQ began a new short term down-trend on Tuesday.   Nevertheless, note that bearish adviser sentiment is only 4 percentage points below bullish sentiment.   This is a contrary indicator and suggests that much of the selling may be over.   It is rare that bearish sentiment gets close to or above bullish sentiment. The T2108, while low at 22%, is far above the 7% seen at the lows on August 8. If the August lows hold, we could see a major rally develop.   I remain almost 100% in cash until a longer term up-trend develops with the GMI around at least 4.

Continuing my search for new leaders, note that two auto parts stocks, AZO and ORLY, showed up on the new 52 week high list on Tuesday.   I could not resist buying a Sept 300 call option on AZO, in my most speculative trading account. Having a stock at a new high after all of the market weakness is a terrific sign of technical strength and AZO could rise if the market rebounds.   AZO is one of the nine high priced leaders I follow regularly. Below is a monthly chart of this growth stock (click on to enlarge).

12 thoughts on “New QQQ short term down-trend; mainly in cash, and one AZO call”

  1. Hi Dr. Wish,
    My colleagues and I read your posts every morning – great technical stuff!

    Since AZO popped up on your radar, I want to mention that the investment firm I interned at in college starting buying AZO in the quarter ending December 31, 2009.

    Here is a link to their most recent filing: http://www.sec.gov/Archives/edgar/data/1317588/000091957411004942/d1220405_13fhr-a.txt

    Interesting to see the time difference in fundamental driven vs. technical investment purchases.

    David

  2. Thanks, David. Looking at the monthly chart, there were many times others may have bought AZO for technical reasons much earlier. So don’t judge the benefits of technical analysis according to my timing. I typically do not buy growth stocks when the GMI is low.

  3. Hey DR. Wish!
    Good point and after reading my comment it does seem like I was judging all of technical analysis based on your post today. I would like to redact and say it was not my intention to make an absolute comment about technical analysis as a whole and just a relative comment due to post.

    BTW, my own trading is generating profits since using stop losses and technical analysis: your classes introduced me to employing these in a real way 🙂

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