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New QQQQ short term down-trend begins; buying QID

@ 11:14 pm
GMI3/6
GMI-R5/10
T210877%

I am very cautious about the current market.   I believe that we have entered a new QQQQ short term down-trend.   On Friday there were just 11 new highs and four new lows in my universe of 4,000 stocks.   In addition, a number of leaders have broken down, including AIPC, QSII, ALGT and NFLX.   When rally leaders falter, it often is an ominous sign of things to come.

With the GMI now at 3, I am becoming more defensive.   I am getting out of QLD and will buy some QID (ultra short QQQQ ETF).   If this down-trend continues, I will make money in QID as the QQQQ declines.   I am concerned that only 20% of the QQQQ (NASDAQ 100) stocks had a MACD close Friday above its signal line.   The perplexing thing about this market is that my longer term weekly QQQQ trend indicator remains positive.   But any long term decline must, by definition, begin with the short term indicators declining. So, this may be a contained decline withing a longer term up-trend.   The key is to be cautious and wait for the market trend to reveal itself.   I remain mainly in cash.

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New America stock ASIA breaks out and I automatically buy some

@ 10:13 pm
GMI4/6
GMI-R8/10
T210886%

On May 10, I wrote: “So, stocks on the New America list often take off sometime after their story is published in IBD.   One recent addition to the New America list that looks promising technically to me if it can break $18.60, is ASIA. ”

After I wrote that post, I placed a   GTC (good til cancelled) trigger order with my broker to buy ASIA if the stock traded above $18.60.   Sure enough, a week later, on Tuesday, ASIA broke out on huge volume.   I was at an all day meeting on Tuesday, when ASIA broke 18.60 and I bought my shares automatically at around $18.66.   One does not have to watch the market in order to buy break outs.   Just use trigger or buy stop orders. ASIA closed Tuesday at 19.44. I will now place a GTC trigger order to sell ASIA if the stock falls below $17.   These trigger orders take the emotion out of the trade. Note on the chart where “NA” indicates when ASIA appeared in the IBD New America column. It makes sense to monitor stocks that appear in the New America column.

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QQQQ holds support; 43rd day of up-trend; QSII

@ 11:52 pm
GMI4/6
GMI-R7/10
T210883%

I always have to remember not to anticipate a change in trend, but to wait for the actual signal.   On Monday, the QQQQ went to the edge of support and held.   There were 19 new highs and 8 new lows in my universe of 4,000 stocks on Monday.   Only 3 of the new highs were on my IBD100 lists: VPRT, QSII and NPK. I have been writing about QSII for weeks.   It broke out of a three year base in April and is at an all-time high.   I own QSII. I also have a position in QLD, the ultra long QQQQ ETF.   I intend to sell cash-secured puts in my IRA in early June if this up-trend remains intact.