0 of 38 country ETFs are in daily+weekly RWB up-trends;”Sweet 16″ stocks that are

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T210810%

When markets decline I return to my modified Guppy GMMA charts to get a clear idea of the short and long term trends. I use a modified set of 12 exponential averages and one simple average (check out my blog glossary for details) to produce the pattern. Daily averages show shorter trends and weekly averages show more significant longer term trends. I draw a chart for each. In each timeframe, when the shorter averages (red lines) are above all of the longer averages (blue lines) with a white space between them, it is an RWB up-trend. Declines are the reverse, and show up as BWR down-trends.

I created a column filter in TC2000 to detect equities with RWB up-trends on both their daily and weekly timeframes. I was startled to find that none of the 38 world ETFs I follow have both weekly and daily RWB up-trend patterns! Examples are shown below for the QQQ.

First the daily, showing a daily BWR downtrend:

Now the weekly–the long RWB up-trend has ended, but a weekly BWR down-trend has not formed, yet. The dotted line is the close each period.

34 of the 38 country ETFs (89%) are in weekly BWR down-trends! For example, Singapore:

And China looks like a major double top!

With most of the world markets in weekly BWR down-trends, it may be that the U.S. markets are just catching up to them, and may have a long way to fall…..

While I have been in cash during this decline (the GMI, once again, alerted me to get out), my students are learning to trade virtual margin accounts of $100,000 and must stay 90% invested. They are experiencing many losses while trying to go long growth stocks using the set-ups I have taught them. I did teach them that these set-ups only work in rising markets, and they are learning this valuable lesson. However, to help them go against the tide and find some up trending stocks to purchase, I ran my weekly and daily RWB filter to find stocks that are still in up-trends. I found that just 62 0f 4,938 stocks (1.3%) in the US database met my criteria. I next sorted these stocks by appreciation from a year ago and found that 16 of them are now up 80% or more from a year ago.

If, like my students, I had to buy stocks now, I would research these “Sweet 16”: ECYT REGI GHDX FRPT EHTH OFG NEO CORE UVE ARII XOXO REV SPNE SCWX SONC BURL.  This filter might work much better when in a rising market!

The GMI remains at 0 (of 6) and on a Red signal.

One sign that we could be close to a bottom is that the T2108 indicator closed Friday below 10%. This monthly chart shows how rare it has been for the T2108 to be below 10% since 2008 (shown by green line). T2108 did reach 4% in 2016 and 1% in 2008. From its inception in 1986 to 2007, T2108 had only 7 other declines that reached below 10%.

However, this weekly chart of the QQQ shows above average down volume the past 4 weeks and is an ominous technical sign. Most bear markets begin with the 30 week average (red line) curving down (Stage IV), which has not occurred. If it does, then this decline is just getting started…..

 

 

 

 

 

 

 

 

 

TC2000 workshop gems; $QQQ $SPY in daily BWR down-trends

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I attended the TC2000 workshop in Maryland during the weekend and learned many important things. By the way, the educator, Michael Thompson, was tremendous and I suggest you catch him at his next workshop. His upcoming free workshops are listed here.

Most important, within 30 days, TC2000 will run on a variety of platforms, including Macs and iPads! It will no longer be necessary to run a special program to run Windows on a Mac.

I also learned how to create a condition to find stocks at all-time highs.  Simply use built-in variables that come with TC2000 to create the condition set below. My requirements of price>$10 and daily volume> 50,000 are my specs and differ from those used by Michael. The important thing to note is that one can create this condition set in a column (or scan) and use it to find all stocks in a watchlist that are hitting all-time highs during the trading day. One can then plot the stocks on a monthly chart, draw in the green line tops (an all-time high not surpassed for at least 3 months) and find stocks having a green line break-out (GLB) during the current day.  A GLB with a high volume buzz (another stat available in TC2000 that shows whether volume when accessed during the day is above average for that time of day) can indicate a break-out with a lot of buying interest.

13 stocks met these criteria Friday: CME, CLX, CHD, UGI, ANTHM, LW, TNP.F, KZR, MKC, AWK, AWR, WEC, VVC. Any stock that can come through the recent market weakness at an all-time high must be worth my researching……

I also learned at the workshop that some persons find it difficult to access my TC2000 club, Dr. Wish. To access my club with its free scans and green dot video tutorial, you must go to www.wishingwealthblog.com/club and sign up. Once you enroll, you restart TC2000, go to the library tab on your page and my club should be visible. If not, contact support@TC2000.com.

If you go to the Glossary tab at the top of my blog page, you will learn about the RWB and BWR patterns I like to follow. I am using here daily exponential averages, rather than the weekly averages discussed in the glossary. The daily averages show changes more quickly. For the first time since last April, QQQ is in a daily BWR down-trend with all 6 shorter term averages (red lines) declining well below the declining blue lines, such that there is a white space between them. This BWR pattern is a sign of weakness. Much better to be long when the index is in the opposite RWB pattern, which was mostly the case from May until October. The SPY is also in a similar daily BWR down-trend (not shown).

With the major indexes in daily BWR patterns and the GMI at 0/6  and on a Red signal, it makes sense to me to stay away from going long in this market. There will be plenty of time to go long once the GMI flashes Green and the RWB patterns return. I will post again Thursday evening.


 

Is this the bottom?

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No one knows if the oversold conditions reached on Thursday and Friday are the final lows for this decline. T2108 did briefly reach single digits and the put/call ratio did reach 1.2, indicating very oversold daily conditions. The daily stochastic did fall below 20 and a green dot crossover occurred on Friday. The Friday bounce may therefore have further to go. An ominous sign of weakness is that the recent GLBs of the DIA and SPY have failed–they both closed back below their green line tops.

There are a number of factors which I will monitor to determine when it is really safer for me to go long again. Perhaps the most important is the weekly chart of the QQQ (below).  The QQQ closed right above its 30 week average (red line). The last time the QQQ closed the week below this critical average was last April–for one week. It then retested the average on three separate weeks. A close below the 30 week average is a sign of significant technical weakness for me and if the average turns down it could signal the beginning of a Stage IV decline.  Also note that in a sustained up-trend the 4 week average (red dotted line) remains above the 10 week average (blue dotted line) which in turn is above its 30 week average. This pattern was evident from May until 2 weeks ago. I have written before that I have more chance of profiting on the long side buying growth stocks when the QQQ closes above its 10 week average. It is possible to trade long for a considerable period when the QQQ has the 4w>10wk>30 wk pattern.  Currently, the 4 week average is heading down and is actually below the 10 week average. My preferred buy signal will happen when that pattern comes back. For now, I am content to remain on the sidelines while the bulls and bears battle it out. (In reading this chart, remember that the QQQ might trade below an average intraweek and that the closes in the chart represent the weekly close.) A trend follower acts after the technical signal has occurred, not before.

The GMI= 1, of 6, and remains on a Red signal.

Day 1 of new $QQQ short term down-trend, GMI=1

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T210831%

After 63 days, the QQQ short term up-trend has ended. Note that since 2006, about 40% of new down-trends have lasted less than 5 days, so a new up-trend could still occur this week. With put/call ratio at 1.06 on Friday, we are not far from very oversold in this contrarian indicator. With the QQQ below its lower 15.2 daily Bollinger Band, we should get at least a regression to the mean soon. The GMI is at 1 and could flash a Red signal with another weak day Monday.

12 stocks at ATH bouncing from 10 week average: $VRS $SQ $CYBR $RP $CBM $BBU $TTWO $SERV $VRTX $KIDS $I $IRDM

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One of the set-ups I am teaching my students this semester is to buy growth stocks above their last green line top (ATH not exceeded for at least 3 months)  that has bounced up off of (or close to) their 10 week average. The 10 week average (blue dotted line) must  be rising above its 30 week average (solid red line). Once buying the stock on this set-up, they must place their initial hard or mental stop loss below the low of the week of the bounce.  The idea is to buy a strong stock and hold it until the 10 week average is violated at a weekly close. Twelve stocks hitting an ATH (all-time high) on Friday met these criteria as of Friday’s close. Here are three of their weekly charts. The first two have recent earnings increases above 100% and all have already at least doubled over the past year–a sign of strength.

A few other stocks that did not reach an ATH on Friday but have doubled the past year and bounced their 10 week average last week include:  TRHC, NSP, ZEN, BJRI, EVBG, LPSN, RNG, SPSC. SPSC hit all of my favorite set-ups, including a green dot, last week. Here is its daily chart:

We came through the typically weakest month of the market, September,  unscathed. There are some warning signs, though. There were  more new lows than highs on Wednesday through Friday and the strong tech stocks are masking the weakness in much of the rest of the market. The health stocks are also surging (CURE (3x ETF), HUM, HIIQ, UNH, MOH, CNC, WCG). But the financial stocks look weak.  In fact, this weekly chart of the financial ETF, XLF,  shows it may be entering a Stage 4 decline–very ominous and worth monitoring. If the hikes in interest rates don’t help the banks to prosper, it may be telegraphing tough times to come.

 

But the GMI remains on a Green signal–for now.