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Nicolas Darvas bio; GMI: +6; QQQQ biggest gainers; More strong doublers at new highs

@ 5:26 pm

Nicolas Darvas attracts the fascination of many traders.  Some of my readers have asked for more information about this amazing dancer-trader.  While I know he is deceased, the best source on Darvas is the article (available for a small fee from the TIME magazine archive) that made him famous–Pas de Dough, May 25, 1959.  If anyone else knows a better source about Darvas, please send it in.  Also, check out my piece on his little known and rare final book, cited in my favorite posts link on Darvas, to the lower right.

The GMI closed the week at +6.  Gmi1118 There were 323 new highs on Friday, the highest number since October 3.  Between 62-64% of the stocks in the Nasdaq 100, S&P 500 and Dow 30 indexes rose on Friday.  23% of the 4,000 stocks in my universe are now within 5% of a 52 week high, compared to 9% near a new low.  Friday was the fourteenth day (U-14) of the QQQQ up-trend.  Since this up-trend began on November 1, the QQQQ has risen +6.6%.  During this period, 81% of the 100 stocks in the Nasdaq 100 have advanced.  This again  shows that if we traded with the up-trend in the QQQQ average, we had an 81% chance of having a profit.  The top ten gainers during this period are:  LVLT (+40.8%), MRVL (+25%), AMZN (+18.9%); FAST (+17.7%), ATYT (+16.9%), QCOM (+16.3%), WYNN (+16.1%), INTU (+15.9%)MLNM (+15.4%) and GILD (+15.3%).  I  hope you owned some of these.  33 of the Nasdaq 100 stocks have gained 10% or more since this up-trend began.

The WPM shows improvement in all indexes, but the S&P small cap.  Wpm111805 All five indexes are above their 30 day and 30 week averages.  But 82% or more of the component stocks in all these indexes but the small cap are above their 30 day averages.  In contrast, only 73% of small cap stocks are in a short term up-trend.  The small cap stocks are also least likely to be above their 30 week averages (61%).  Thus, while most stocks are participating in this up-trend, the small caps are laggards, for now.

Among the stocks that hit a new high Friday, have strong recent quarterly earnings and are up at least 60% in the past year are: GOOG, PLLL, CUTR, UBB, ISRG, IRIS, MDR, HUBG, MRVL, HOLX, RES, GHL, SUPX, CX, KYPH, CDIS,GOL and CERN.  (I own some of these.)  These stocks are prime rockets for further research and consideration.

How have you used this site to inform your trading?  Can you send me some experiences I can post for others  (anonymously, with your prior permission)?  Please send your pearls of Wishdom to me at: silentknight@wishingwealthblog.com. 

GMI back to +6; A very strong day for techs; Pearls of Wishdom?

@ 6:25 am

The GMI regained the maximum level of +6 as there were 234 new highs on Thursday.  There were also 199 successful 10 day new highs–stocks that hit a new high 10 days ago and closed higher Thursday than 10 days earlier.  This is the largest number since September 16 and shows that buying new highs has been profitable.  58% of the 4,000 stocks in my universe closed above their 10 week averages, the highest percentage since September 13.  Gmi1117_2 By the way, September 13 also was a short term peak in the QQQQ, so high values on some of my indicators could also represent a minor top.  92% of the Nasdaq 100 stocks rose on Thursday, along with 88% of the S&P 500 stocks and 80% of the Dow 30 stocks.  There has not been a day when 90% of the Nasdaq 100 stocks advanced, since I began posting the GMI in late May.  So yesterday was an unusually strong day for the tech stocks.  79% of the stocks that have doubled in the past year closed above their 30 day averages and twice as many stocks are within 5% of their new highs than new lows (22%/10%).  Thursday was the thirteenth day of this QQQQ rally (U-13).  To sum it up, enjoy this strong rally, but we should watch for any signs of irrational exuberance and a minor top.

How have you used this site to inform your trading?  Can you send me some experiences I can post for others  (anonymously, with your prior permission)?  Please send your pearls of Wishdom to me at: silentknight@wishingwealthblog.com. 

GMI: +5; No surprise on GM

@ 12:01 am

The GMI declined to +5 Wednesday–there were only 68 new highs and 121 new lows.  Having more new lows than highs is sometimes ominous.  But the indexes are so far above their 30 day and 30 week averages that I am not worried.  Gmi1116 There were 134 successful 10 day new highs–stocks that hit a new high 10 days ago and closed higher Wednesday than they did 10 days earlier.  Three quarters (77%) of the stocks that have doubled in the past year closed above their 30 day averages. And 50% of the 4,000 stocks in my universe closed above their 10 week averages. However, 48% of stocks are in a short term up-trend, down from 57% on Monday.  So there has been some deterioration in the market internals, but not enough to seriously impact the major stock indexes.  Wednesday was the twelth day (U-12) of the QQQQ up-trend.

A lot of attention was focused on GM’s decline Wednesday (-5.8%).  Could we have foreseen this trouble?  The chart tells it all.  Look at this weekly chart of GM. Gm111605_1  The red line is the 30 week moving average that Stan Weinstein (see his book at right) wrote about as being central to defining a stock’s trend.  A declining 30 week average is evidence of a stock’s declining trend.  Note that since June 2004, with the exception of a few weeks in 2005, GM has traded consistently below its declining 30 week average.  No one should have been surprised at GM’s action, after it fell back below its 30 week average at the end of September.  I NEVER BUY OR HOLD A STOCK THAT IS TRADING BELOW ITS THIRTY WEEK AVERAGE.  This rule alone gets me out of bear markets and declining stocks early in the down-trend. Charts are worth a lot more than a thousand words.

Please send me your feedback and comments at: silentknight@wishingwealthblog.com.