General Market Index (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.

See you at AAII DC July 15 workshop; $QQQ $SPY $DIA $XAR yellowband charts; GMI=Red

@ 9:48 pm
GMI2/6
GMI-20/9
T210855%

I will be sharing the platform with Alan Ellman at the DC AAII workshop on July 15. Alan is an expert on teaching people how to use options for generating income. Many of his terrific books are listed on my site. Alan’s site is here. I will be talking about assessing the market and picking GLB growth stocks in a yellowband up-trend that might be useful for people applying Alan’s techniques. Alan is a retired dentist and real estate investor who taught himself successful stock investing and has specialized in teaching people how to use options for income. He is a very engaging and passionate speaker about this topic and I thoroughly enjoy listening to him. You may also get an opportunity to meet my stock buddy, Judy.

The market is divided again short term but all 3 index ETFs remain in longer term Stage 2 up-trends, above their rising 30 week averages (red line). The SPY and DIA also remain above their critical 10 week averages (dotted line). But the QQQ is now below this important level and the GMI has now turned Red. If I had to guess at the resolution, I would say that tech stocks have completed their post earnings release lull swoon and are setting up a rise into release of 2nd quarter earnings. I would therefore not be surprised to see a rebound this month. But my job is to follow the trend and not try to predict it. So my approach is to be defensive yet ready to move up with the market if growth stocks move up.

Here is the yellowband chart of QQQ. Note recent red volume spikes and QQQ closed below 10 week average (dotted line).

SPY remains above 10 week average.

DIA looks strongest.

In this pugnacious world environment, the defense stock ETF, XAR, is hitting all-time highs, after its GLB last November.

The GMI= 2 and has now been below 3 for two consecutive days, triggering a Red signal. A Red signal can often come at the bottom of a decline and may not persist. A GMI= 0 is a much more significant sign of weakness fir me. All 8 of my more sensitive indicators in the GMI2, focusing mainly on the QQQ, are negative.