General Market Index (GMI) table

ORCL had a GLB (green line break-out) to an ATH (all-time high) in June on above average volume. It has then consolidated for 12 weeks. On Monday it will report earnings and a rise above 127.54 with above average volume  to an ATH would be worth monitoring. ORCL has already doubled its yearly low and MarketSmith indicates it has a comp rating=95 and RS=96. See weekly chart below. Two weeks ago ORCL bounced up off of its 10 week average (purple dotted line). Note that its 4wk avg>10 wk avg >30 wk avg, a sign of a powerful Stage 2 up-trend. When I miss a GLB, I may look to buy after a bounce up off of the 10 week or 4wk average. Study this chart for these set-ups. A green bar on this chart shows a bounce up off of a rising 4 week average that is also above its 10 week average which is above its 30 week average (30 week average is solid red line).

Many fear a weak September, especially with a government shut-down on the horizon. But the market may  defy all and rise anyway. The QQQ short term trend count is now up and the longer term GMI is Green, see the GMI table below. I bought a little TQQQ last week and will add more if the new QQQ short term up-trend holds. I am more confident of a new short term up-trend once it holds for 5 days. My analyses show that about one quarter of new QQQ short term up-trends end within 5 days, so I add more TQQQ very slowly. The last short term up-trend lasted for 70 days and TQQQ ran up +26%. TQQQ climbed much higher than that if one had sold before the up-trend actually ended.

This 10:30 weekly chart shows QQQ in a continuing up-trend. Note that QQQ recently closed (gray line) back above its 10 week average (dotted line). The 10 week average has been rising above the 30 week average for 27 straight weeks, see GMI table below, and QQQ remains in a Weinstein Stage 2 up-trend. So is SPY.

QQQ’s 4wk average is now below its 10 week average, a sign of technical weakness. Failure to retake the 4 wk average (red dotted line) this week would suggest to me at least a decline to the 30 week average (red solid line at $337). The weak month of September is on tap and the GMI=1 and is Red. Time to be in cash, short (in SQQQ) or on the sidelines.

SQQQ is the the triple leveraged inverse of QQQ.

Another way to be short QQQ is to purchase a deep in the money put option on QQQ. If QQQ declines in September to the 30 week average, the put could rise a lot. For example the September, 29  380 QQQ put is trading at about 17.75 x100= $1775. Break even is 380-17.75= 362.25. Every point that QQQ is below 362.25 leads to a gain in the put of $100. If QQQ declines to 337 between now and the end of September, this put would trade at around $43 (380-337), yielding a gain of $25.25 (x 100) on an investment of $17.75 or +142%. The risk, of course, is that QQQ rises a lot and one could lose the entire cost of the put. When you buy an option you cannot lose more than you paid for it, so at least your loss is capped. Study how options work. I like Michael Sincere’s book, “Understanding Options.” I used to assign it to my honors course students.