General Market Index (GMI) table

Warnings signs appear for the $QQQ; GLB: $BCO

@ 7:49 pm
GMI4/6
GMI-26/9
T210859%

While the GMI remains Green and the QQQ short term trend remains up (U-12, see table below), I am concerned by the lack of follow-through on a lot of GLBs (green line break-outs) recently and the number of high volume down days on the QQQ. Look at this daily chart of the QQQ. Most of the high volume days have been down days (red spikes).

These are what IBD calls distribution days. They can signal a top. And once earnings are out, we will enter the post-earnings lull when the market often weakens. I have seen a lot of declines in September/October. While I still hold some small long positions, I will run quickly if they falter. People have become complacent and now think that the market must always rise. I have been watching the markets since the 1960s and have seen repeatedly that the good times eventually end. The real winning traders are those who protect their accounts when the market declines.

Almost every stock that came up on my scans this weekend reports earnings this week. I will therefore not list them. Here is one stock that reported good earnings last week that is flying high on marihuana and had a GLB (breaking its 2008 peak). While TC2000 sent me my programmed alert of this GLB  after Wednesday’s open, I was away and missed the break-out. I think BCO is still worth watching now that it is smoking….

Wha a nice weekly yellowband advancing pattern! Is BCO too high or on a roll?

Here is the GMI table.

 

 

TC2000 Scan for bounce up off of support; $PETS unleashed? $CBOE yellowband

@ 10:24 pm
GMI6/6
GMI-28/9
T210864%

I created a new scan in TC2000 that looks for stocks that have bounced up off of 3 daily indicators of support/over-sold within the past few days. The stock must also have closed at least 50% above its lowest price of the last 250 days and be currently above $15. There are also other criteria in this scan. This scan of 4,800 U.S. stocks this weekend yielded 8 candidates: SRPT, INDB, ONCE, PETS, BATRA, ALNY, WEN, NCLH. Of all, I like PETS best. It had a high volume GLB to an all-time high (ATH) in May and has finally rested/consolidated. It has also doubled the past year and had a recent EPS +37% and an IBD Composite rating = 96 and RS= 98.

This weekly chart also shows a powerful rising yellowband pattern with the stock repeatedly closing above its 10 week average (dotted line) which is well above its rising 30 week average (red line).

Unfortunately, PETS reports earnings on Monday morning. Should have run this scan Friday afternoon. What to do?  Buy PETS a collar?!

ALNY, a bio-tech and a long time Judy favorite, also came up on this scan. But I have too many bio-techs already, and they are so volatile…If you would like to run this scan yourself and you have TC2000, I added it to my free club (Scan 07202017three…) which can be accessed at www.wishingwealthblog.com/club or at the link at the top of this blog…

I also manually looked at stocks that hit all-tme highs Friday or were close to a GLB. Here are some worthy of research:NRE,TBK,RGA,PODD,ELMD,EXPD,NDAQ,AAAP,ABBV,CSRA,AGO. When I noticed that NDAQ is on the list I looked at a weekly chart of CBOE. Note the strong rising yellowband pattern since its GLB in December. How did I miss this?

All of my GMI and GMI-2 indicators are positive. The earnings inspired rally has begun.

 

 

 

 

 

 

 

Some of William O’Neil’s wisdom exemplified by the great traders I watched; GMI is Green

@ 9:17 pm
GMI6/6
GMI-27/9
T210863%
“Another way to use the tape productively is to review a comprehensive graph book every week and make a list of stocks that meet your technical plus fundamental selection criteria.
      Then jot down the pivot price where you would consider buying. Also write down the average daily volume for each stock on your prospect list.
      Keep this shopping list with you every day for the next couple of weeks when you are watching the ticker tape or the market. In time, one or two of the stocks on your prospect list will begin prancing all over the tape and will approach your buy point. This is the time to get ready to make a possible buy decision—if the stock trades at your buy price and you conclude the day’s volume will be up at least 50% above average. Generally, the more demand for a stock at the buy point, the better.”
                                           William, J. O’Neil, How To Make Money in Stocks, 1st edition revised, 1988, p.197
In preparing for yesterday’s exciting AAII DC Metro workshop with the talented option educator, Dr. Alan Ellman, I reviewed a lot of sources that had influenced my trading career. The above quote from the great trader and founder of IBD, William O’Neil, caught my eye and really captured the way I saw the great traders Mark Minervini and David Ryan, trade at their extraordinary annual workshop. Note that this quote was written long before we all had the super computers with which to review our charts, monitor volume and set alerts. It also references technical and fundamental criteria.
The approach here is very different than just scanning the market real time and buying something that looks good. This more reasoned approach suggests that during the unemotional calm of the weekend or night before trading, review stocks that are setting up and have the technical and fundamental characteristics that one values. This strategy assumes that one’s trading is rule based and systematic, guided by specific criteria. Then make a small list of candidates to monitor for a break-out on above average volume. One can then pull the trigger quickly. (I use TC2000 to alert me when a stock on my list is having a GLB on unusually high daily volume—volume buzz.) When I attended the Minervini workshop last October and watched Mark and David Ryan trade real time, I saw that both men showed extreme discipline, and when neither of them found a stock on their watch lists that met their criteria that day, they just sat tight–Wow!!!
How many of us think we have to buy something every day and get seduced by the action? These men, and the great Nicolas Darvas and, I suspect, many great traders, have the patience to wait for a stock to meet their stringent criteria before they risk their money.  Food for thought….
The GMI is back to 6 (of 6) and Green. By the way, I updated my list of GLB stocks on my site.