Why I sold $INMD at $57; Following the tweets of some smart traders: @markminervini and @TMLTrader

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During the internet bull market of the 90s I sold Yahoo around $400 per share  (pre -split) because my internal voice said making money was too easy. I had seen the stock go up $50 in one week when I was holding a large position. I tell my students that whenever my voice cautions me that way, I sell. (It rarely happens!) It happened a few days ago, however,  when I had a small position in INMD. I watched it rising fast and then on Monday morning, 11/18, INMD was trading up almost $9 from Friday’s close.   It was also trading outside of its upper daily 15.2 Bollinger Band on very heavy volume and had gone vertical. My voice went off and I sold around $57. I had a 40%+ gain in just 9 days. I was lucky. INMD closed Friday at $41.55. When I make money too fast, I sell. As they say,: Bulls make money, Bears make money and Pigs get slaughtered. (Wy did I buy this stock? The consummate trader, Mark Minervini, @Marmminervini, had tweeted about INMD.The stock was a strong recent IPO and at all-time highs. I merely bought some on November 6, with the intention to sell it if it traded lower than the prior day’s low. I get great trade-able ideas by following the tweets of a couple of very smart traders: @markminervini and @TMLTrader, whom I met at Mark’s annual invaluable trader workshop.

 

The GMI is at 4 (of 6) and many of the very short term indicators in the GMI2 are negative. This is a reduced trading week and probably not the time for me to add or increase positions.

 

Dissecting $AAPL’s GLB (Green line break-out); thank you Nicolas Darvas

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AAPL hit an all-time high of $233.47 on October 3, 2018. After that high was not exceeded for 3 months, I drew in a green line, designating a green line top. I could then set an alert on TC2000 to alert me when AAPL traded above the green line. It had a green line break-out (GLB) one year later on October 11, 2019. Note the above average trading volume that day confirming the break-out.  AAPL has now advanced +12.5% since the GLB. Note that after the GLB, AAPL re-tested the green line for a few days, a common occurrence. If it had CLOSED back below the green line, I would have sold my position.  I would then have repurchased it if it retook the green line. I have found that the GLB strategy works really well for me in a strong market. The idea is to buy a stock that has advanced to an all-time high, then rested for 3 months or more and subsequently closes above the green line on above average trading volume. The fabulously successful trader,  Nicolas Darvas, concentrated on buying stocks breaking to all-time highs during a rising market. Every person should read his book, How I made…listed below. (It is the first book I require my students to read.)

Note that during the time of the GLB and for weeks before, AAPL had been in a nice daily RWB up-trend.

GMI remains at 6 (of 6).

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.

 

 

 

Waiting for $QQQ to show a green dot

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The chart of QQQ’s daily 10.4 stochastics has arrows that show where the fast stochastic (red line) has crossed above the slow stochastic (blue line). That is what I call a green dot signal, also shown on the price chart by, you guessed it,  green dots. (A video tutorial for building the green dot signal appears in my TC2000 club.) The green dot is a very short term trend signal on the daily chart of a stock or index in an up-trend and indicates that a bounce is likely. Note that most advances begin after the daily 10.4 fast stochastic has fallen below 50 and then has a green dot. The end of a bounce usually occurs after the stochastic is above 80 (upper horizontal line) and  often when it reaches 90 or greater. I therefore think that the QQQ, with Friday’s stochastic reading of 92.67, is overbought and more likely to stall out soon. (QQQ is also near the top of its upper 15.2 Bollinger Band.) I would prefer to place a bet on a rise in the QQQ (or stock) once the stochastic falls below 50 and flashes another green dot signal….

The GMI remains on a Green signal and is at 6 (of 6).

19 Recent IPOs at ATH with recent GLB: $MTCH $TWLO $SEND $SFIX $ROKU $CABO….

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So many stocks are breaking out to all-time highs (ATH). Every rocket stock has a long series of repeated ATH. I went to barchart.com and filtered stocks that hit  an ATH on Friday and copied the list to Excel and then to a watchlist in TC2000.  I then used TC2000 to  find the subset that came public since 2015 (created a column with a formula c/c4 set to yearly; those with a result of  ** could not be calculated because they did not trade before 2015). I then manually looked at each monthly chart to find those that had hit an ATH and subsequently consolidated for at least 3 months.  I drew a green horizontal line at the peak price it reached before it consolidated.  I selected those that had a GLB (green line break-out, closed above its green line) recently. I also like to see above average trading volume the week of the GLB.

These recent IPOs are worthy of my researching for future purchase. The great trader, Jesse Livermore, liked to buy the first GLB (he did not use my term!) of a recent IPO. Note that if a GLB stock closes back below its green line, I sell it immediately. I may repurchase it if it closes back above the green line–see the charts of MTCH and SFIX below as examples of GLB failure and rebound. The 19 stocks from this exercise are, in random order: MTCH, PSTG, NTRA, NVCR, NXRT, TTD, TWLO, YEXT, SEND, SFIX, ROKU, RPD, SQ, CISN, CNDT, CABO, CVNA, APPF, ADSW. Below are weekly charts of a few of them. I sometimes tweet GLBs intraday when TC2000 alerts me. Follow my tweets–@wishingwealth.

By the way, while not a recent IPO (in 2011) , MPC had a GLB on Friday, perhaps reflecting strength in oil. Looks like a cup and handle break-out….

 

The GMI remains on a Green signal and the QQQ has reached the 35th day of its short term up-trend.