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IBD went back to call the market in a resumed up-trend.   As I said yesterday, the QQQ was on critical support and could bounce.   And AAPL re-took its 10 week average. The QQQ’s rise occurred on lower volume than the preceding day’s decline, however.   Only 68% of all stocks rose, compared with 89% of the Nasdaq 100 stocks.   There were only 246 new 52 week highs in my   universe of almost 6,000 stocks on Tuesday, compared with more than 300 on each of the days before Tuesday’s rally. So this advance was not as deep as one might think and was concentrated in the tech stocks.     While I took on more long positions on Tuesday, I am ready to exit if this rally fades.

After 64 days, the QQQ short term up-trend could end on Tuesday with a down or flat day.   (IBD now declares uptrend under pressure.) It was a great, long ride! The QQQ is on several levels of support that I monitor, so that index could bounce up by Tuesday’s close.   If it does, the key for me   is whether that bounce will hold through Wednesday. A failed bounce could lead to a large decline. I cut back on my holdings in my trading accounts on Monday. Remember, a market always falls faster than it went up, and this market rose pretty fast.

Yesterday I showed you   the RWB rocket stock pattern and how it helps me to identify strong stocks.   Tonight I will show you the reverse, the BWR pattern, that can keep me out of stocks in a major down-trend. You can see from this weekly Guppy chart of GLD, how it alerted me early on to the down-trend in gold. Who in their right mind should have been long gold in 2013?

This chart shows ISRG’s transition from an RWB up-trend into a BWR down-trend.

A weekly Guppy chart is all I need to determine the longer term trends of a stock, ETF or mutual fund. Guess what pattern the Dow has……..