General Market Index (GMI) table

12th day of $QQQ short term up-trend; $QQQ and $CDW have an RWBCount= 12

@ 7:20 pm
GMI5/6
GMI-27/9
T210871%

For a long time I have thought that my adapted Guppy charts composed of 13 weekly moving averages provide an excellent method for identifying stocks in a significant up-trend. Six of the exponential averages are red (3,5,8,10,12,15) and 6 longer term averages (30,35,40,45,50,60) are blue. When all the red averages are rising above the blue averages such that there is a white space between them, this constitutes a red white and blue (RWB) up-trend. I also add a 13th average (1) as a dotted line which shows the closing price each week. When all 13 averages line up with each shorter average rising above the next one (1>3>5>8……..60) this constitutes a really strong up-trend. I have created a new indicator that counts the number of averages that are rising above each longer average. The indicator, called the RWBCount, goes from 0-12. This indicator can be applied to both ETFs and individual stocks and in the future I will often provide the RWBCount.  Below is a weekly chart of the QQQ, which has an RWBCount=12. Note that each line is above the next one. The RWBCount for DIA=12 and the SPY=12. So right now all 3 indexes are in very strong RWB up-trends.

NVDA has an RWBCount=12 and has been 11 or more for months. Note how weekly price leads all of the averages up.

There is no way to know when an RWB pattern will end. I strive to  hop on  stocks with an RWBCount=11 or12 when they bounce up off of support and ride them until the trend ends. By the way, 60% of the Dow 30 stocks have an RWBCount=12. The current Dow dogs are: PFE (5), WMT (5), KO (3) NKE (2). Here is what a “2” looks like.

And a stock not in the Dow, GILD= “0”

Get the picture–I call such stocks BWR or submarine stocks and consider them for shorting…

CDW is an example of a stock with an RWBCount=12 that bounced off of support last Friday. I took a position and placed my stop right below Friday’s low. If for any reason CDW declines on Monday so that I am sold out, I will take my small loss–no emotion. (A stock does not have to rise just because I think it should!) On the other hand, if CDW holds Friday’s low, I will ride it as long as its RWBCount remains high (11 or 12). My goal will be to ride the strong up-trend until it ends and not to try to hop off the first time it shows signs of weakness. Why sell a stock in a strong up-trend? If CDW should rise a few percent, I will move my stop up to break-even. Small losses and large gains–that is the way to succeed in this game. The daily chart of CDW is below. Note the recent green line break-out (GLB) to an all-time high and Friday’s bounce up off of the 30 day average (red line) and its lower 15.2 daily Bollinger Band. Earnings are set for release on 2/14/2017.

Here is the RWB chart for CDW. In the near future I will publish a scan for finding stocks with IRBCount of 11 or 12 that are bouncing off of support. You can sign up for access to my free TC2000 scans at wishingwealthblog.com/club.

The GMI remains at 5 (of 6).

 

 

 

Performance of ETFs since GMI turned green on 11/10; $QQQ on verge of GLB

@ 6:20 pm
GMI6/6
GMI-27/9
T210870%

As this daily chart of QQQ shows, at the close on 11/10 the GMI turned from Red to Green. The table below shows how stocks and ETFs have done since the close on 11/10 through the close on 12/16.

 

If one had bought the following index ETFs at the close on 11/10 one would be up these percentages:

 

The SPY (+3.7%) and DIA (+5.4%) outperformed the QQQ (+3.3%) presumably because the underlying index (NASDAQ 100) contains no financial stocks, which have led the current rally. However, the triple leveraged ETF, TQQQ, as usual, beat all of the regular indexes during this rally, up +10.4%. We again find that that only a few, 10%, of the individual stocks in the QQQ beat TQQQ. In other words, the TQQQ outperformed 90% of the component stocks represented by the QQQ and  83% of those in the DIA and SPY. Yet again, we see how easier it may be to just ride the TQQQ in an up-trend rather than trying to pick in advance the minority of stocks that will beat it. Of course, what goes up 3x as fast also declines 3x as fast…………

The GMI remains at 6 (of 6). Note in the daily chart of the QQQ above, that QQQ is bumping up against its green line, the all-time peak reached in March, 2000. When (not if) it closes above 120.50, it will be a green line break-out (GLB), and only positive for me as long as it stays above the green line.

All GMI components positive; $QQQ near all-time peak; New TC2000 scan for bounces: $CELG

@ 5:28 pm
GMI6/6
GMI-28/9
T210876%

It looks like we are getting the year end/end of quarter rally that should take us through the end of December. After that, we get to see what a Trump administration will do and how easy it will be for them to manage the government. As the news heats up in January with stories of turmoil within the various factions of the government, it may be a good time for the market to come back down to reality. All of this sounds likely to me, but it is better to remain vigilant and let Mr. Market tell me his likely direction. For now, it is full steam ahead, with the QQQ back above its 10 week average with the DIA and SPY. This monthly chart shows that the QQQ (119.50) is getting close to its all-time high of 120.50, reached in March of 2000. A break through this top on above average volume would be quite a sign of technical strength. Note that the 2000 top came after a vertical rise, and that the current market is not showing similar signs of  irrational exuberance—yet………..

I recently worked on a new scan that I have added to those stored and accessible in my TC2000 Club. If you want to access and run these scans you need to have a TC2000 account and then join my Club. Once you do so my Club will appear in your Library tab. The link to join my Club is: https://www.wishingwealthblog.com/club/ Just paste it into your browser.

Here is a picture of the conditions stored in this new scan and its name:

 

This scan finds all US Common Stocks which meet 3 conditions. The fast daily 10.4 stochastics has to be above its long daily 10.4.4 stochastics and the fast stochastics must have been <20 in any of the past 2 days. Thus the stochastic is moving up from oversold. The fast stochastic must also be <=50 so it is not too extended above the bounce  and the stock must close above its 50 day average. The second filter requires the stock to have had a minimum 15% increase from its 50 day low at anytime during the past 50 days. This will find stocks that have popped up at least 15% and just bounced from an oversold stochastics. The third filter requires  trading volume of > 100,000 shares the most recent day.

Based on Friday’s close, this scan detected 5 stocks: CELG, MMS, HELE, AVXS, FTV. I then looked over the fundamentals and technicals of each. HELE is in a Stage II decline and I dropped it from further study. Here is the chart of CELG. I like the fact that CELG is also finding support at its lower 15.2 daily Bollinger Band, a pattern not required by this scan but still very promising. As an educational example, the way I might play this set-up would be to buy CELG Monday and place a sell stop below its recent bounce just below $110. Given the focus of this scan on a rebounding stochastics, I would also subsequently sell CELG if/when the fast stochastics closes back below the slow stochastics. Here is the daily chart of CELG. Note the cross-over of its fast stochastics above its slow stochastics and CELG’s recent surge in price after breaking out of a down-trend. I like to buy stocks that consolidate after a large gap up and then move up. Some of the other remaining three stocks from this scan may also merit further research. When I see promising patterns I often tweet about them intraday (@wishingwealth).

The GMI components are all positive. But T2108 is getting close to 80%…..