With many high flyers being extended and reversing last week (CMG, MU, NVDA) it may be time to sit on the sidelines until 2nd quarter earnings come out in July.
General Market Index (GMI) table
Blog Post: Day 29 of $QQQ short term up-trend; Introducing the x8/x21/30 day set-up, examples=$COST, $ANF, $NVDA, $CVLT
I have noticed that stocks that are advancing have the following pattern: x8 day average>x21 day average >30 day average. I learned about the significance of the 8 day exponential average from Pat Walker, who presented to my class and did this wonderful interview with my former student, Richard Moglen. The CAN SLIM team at IBD discovered the value of the X21 day. My use of the x8 with the x21 and the 30 day simple average is my own set-up and do not blame any of them if it doe not work for you.
Look at COST and you will see that the 3 averages line up since May 2 and COST never closed below the 8 since then. Using this set-up one would buy on a day that COST bounces up off of the 8, as it did on Thursday and Friday. I might buy COST Friday or Monday and sell if/when COST closes back below the 8. The blue arrows show all of the times there was a bounce up off of the 8.
The beauty of this and any set-up is that it tells me the stock should move up right away and when to sell with a small loss if it fails.
Think this only works with COST? Take a look at ANF.
And $NVDA
The key is to find a strong stock that has been finding support at its x8 day. I use TC2000 to scan for such gems. Check out CVLT that came up on today’s scan. Stocks need to have the above set-up, be up at least 50% from last year and have reached an ATH within the last 5 weeks. Before I buy, I also look at the MS fundamentals to make sure this is a thriving company.
The GMI is at 4 (of 6) because not enough stocks are hitting new highs. That is a concern. Note also that T2108 is only at 31%. Happy Father’s Day to all of you.
Screenshot
Blog Post: Day 24 of $QQQ short term up-trend; GMI=4 with 2 of the new high components negative–what does it mean? Better to have traded my TQQQ strategy, yet again!
While the other 4 components of the GMI remain positive, I am concerned that the 10 Day Successful New High and Number of New High components are negative. For someone who likes to trade stocks at new highs it is worrisome to me that prior new highs are not doing well and there are fewer stocks hitting new highs. The market averages may be masking this weakness. I am therefore very cautious and mostly in cash now. However, if I had been disciplined enough to buy TQQQ on 5/6, Day 1 of the new QQQ short term up-trend, I would be sitting on a gain of +30.1%, greater than 98% of the Nasdaq 100 stocks (only NVDA and MRNA did better) and 99% of the S&P500 stocks. I hope some of you had the courage to follow this TQQQ strategy based on my QQQ short term trend indicator. Let me know……
