16 Stocks with a Green Dot Bounce from Oversold

GMI5/6
GMI-27/8
T210852%

I prefer to buy up-trending stocks that have bounced from oversold levels and have resumed their advance. The green dot signal video tutorial, available at my TC2000 club, shows how I put a green dot on my daily charts. I ran this weekend a TC2000 scan that detected green dot stocks over $70 (I have more success with expensive stocks) that were recently very oversold. One of the 16 stocks that came up was CRM. Check out its daily chart below. Note the recent green dot and the bounce off of the rising 50 day average (green dotted line) and off of the lower Bollinger Band. CRM reports earnings on 8/28. Four prior green dot signals have worked for CRM but the signal can fail at anytime. A decline back below a green dot would be the spot for my stop loss or an exit point.

The other stocks that came up on this scan appear below. It will be interesting to see which of these stocks continue to rise. A lot depends on the general market’s trend. Note that I have not researched these stocks. This list is for educational purposes only and is provided to help others understand and evaluate this set-up. In late August I begin my course with 180+ university freshmen who will learn everything about technical analysis that I have learned since I was their age.

The GMI remains Green and at 5 (of 6).

 

 

 

RWB weekly strategy can keep me in a good position; $QQQ $SPY $GE $CAT $SQ

GMI6/6
GMI-27/8
T210858%

Daily stock charts are good for determining entry set-ups and initial stops, but daily charts often mislead me and scare me out of good positions. Before I sell out of a long position I should remember to look at the longer term trends evident in the weekly RWB charts (see glossary). Once my entry set-up holds and I am not stopped out, I could actually just hold onto any equity in an RWB weekly up-trend pattern until the white band in the middle (the W in RWB) disappears.

This chart of QQQ shows that its RWB weekly up-trend pattern has never disappeared since 2017! The 6 shorter term moving averages (red lines) have remained well above the 6 longer term averages (blue) with a white space between them. The dotted line shows each weekly close. Sometimes the dotted line moves below the red lines but as long as the red white and blue pattern persists with the red lines above the blue, the advance is continuing. In fact, in a strong up-trend the equity repeatedly closes the week above all 12 averages. (The exact RWB averages are specified in my blog glossary.)

The SPY lost its RWB weekly pattern for a very short period, but it has now resumed.

A good rule for me is to never buy and to sell or sell short any equity with the opposite BWR weekly down-trend pattern. GE is a great example of a BWR weekly down-trend. Why would anyone ride this stock down after April, 2017?

CAT remained in an RWB weekly up-trend pattern most of 2017 with the dotted line (weekly closes) leading the other averages higher. Once the dotted line moved below the red lines and the red lines converged with the blue there was no reason for me to own CAT.  All stocks I buy or retain must be in an RWB weekly up-trends.

This chart vividly shows a complete advance/decline cycle for DDD from 2013-2015. It all looks so clear and easy in hindsight!

Why did I let myself and urge my son, sorry Mike 🙁  , to get scared out of his great pick, SQ which he bought around $11? I now know why–I focused on the daily chart.

I think the weekly RWB strategy can keep me in a good position and reduce the need to closely monitor and be stressed by the daily back and forth gyrations of any stock or ETF I own….

Meanwhile, reflecting the strength in the QQQ and its weekly RWB pattern, the GMI remains on a Green signal, at 6 (of 6).

Draw green dot signals on charts; $SSTI $SFIX; GMI to turn Green? Trade deficits bad?

GMI4/6
GMI-27/8
T210861%

One of my favorie buy set-ups occurs with stocks or ETFs in a nice up-tend (Stage 2) that have a green dot signal. I explained the green dot signal in an earlier post. If you have TC2000, you can go to my club (Dr. Wish) and access the tutorial that David, my co-instructor, made for our students for automatically placing green dots on charts. Just go to my club in the publishing center in your TC2000 Library tab (Club= Dr. Wish)  and select the video from the list at the bottom. There are also tabs at the top of this blog to access these resources. My blog glossary explains the many scans I have also stored in my club.

Here is the daily chart of the QQQ with green dot signals. Note that all green dot signals do not work and if it were possible to predict in advance which ones will, I would be living on my own island. The nice thing about the green dot set-up is that if the bounce fails, I can get out quickly with a small loss–the crucial sine qua non of trading success. Note the recent green dot, calling the QQQ’s current rise.

Last March, I opined about SSTI at 23.54. It subsequently took off without me and I have been waiting for another entry. Well, it had a green dot on Friday. Note the series of higher green dots.

$SFIX, a recent IPO,  had a green line break-out (GLB, see glossary)  to an all-time high (ATH) on the weekly chart, Friday and a green dot (see daily chart). (I exit immediately if a stock closes back below its green line.)

 

I also posted in my club today a watchlist of 60 stocks that hit an all-time high (ATH) on Friday, ATH07032018– I should have labeled it 07062018!   If the market advance resumes, stocks rapidly hitting all-time highs can be among the leaders. So I will watch this list for future green dots.

All of the above are educational resources and are not intended to serve as advice or recommendations. One needs to experiment with these tools and learn how to use them, if at all. In late August, I begin a 14 week class of 200 undergraduate freshmen who are right out of high school. I wish someone had taught me technical analysis at their age…..

The GMI may turn Green and the QQQ short term trend count may turn up with an up day on Monday. Note the QQQ has closed above its 10 week average for 10 weeks, compared with the SPY, at only 1. The fact that the market did not sink amidst the trade wars is very bullish. How long will it last?

Many years ago I attended a lecture during which a very smart pollster questioned our country’s complaints about a trade deficit. He said, if other countries want to sell us their goods and products for our paper money, what is the problem? I add, since the U.S. is the most prosperous economy in the world is it not a fitting sign of strength for the U.S. to be able to buy a lot more than it sells to other countries?

 

 

Green line breakout (GLB) explained; GMI remains Green

GMI6/6
GMI-27/8
T210865%

I have been writing for some time about the value of the green line break-out, GLB, for identifying strong stocks breaking to all-time highs. Almost every growth stock guru I have valued talks about buying stocks after they have advanced, formed a base and then break out. The idea is to not be a pioneer—one does not want to be the only one interested in a stock. The deep pocketed institutions need to be showing buying interest, evidenced by up days with above average volume. I therefore try to find very strong CAN SLIM type stocks that have rested by forming at least a 3 month base and that then break-out to all time highs, preferably with increased trading volume.

I begin by looking at a monthly chart for each stock that hit a new all time high recently and draw a green horizontal line at the highest price reached at any month, that has not been surpassed for at least 3 months. In other words, I want a stock that reached an all-time high and has then rested for at least three months. When a stock moves through the green line or is above its last green line I become interested. I only buy stocks that are trading above their last green line tops. Stocks that form a multi-month (or multi-year) base at an all time high, especially recent IPOs, often go on to large gains after they break out. (The great Jesse Livermore made a similar observation.)

While it may seem strange, I also like the stock to have already doubled from its lowest price over the past year. This attribute helps, but is not always required, especially for IPOs. The great Nicolas Darvas alerted me to the idea that a stock that has recently doubled is likely to double again. As a psychologist, I have learned that the best predictor of a person’s future behavior is his/her past behavior. The same can apply to stocks.

Why do I buy stocks at all-time highs? Because there are no buyers who bought at higher levels, had a loss, and are waiting to sell out if they can get even. On the other hand, a stock that has advanced to an all time high, rested or declined a little to form a green line top (a base),  and then overcomes any overhead supply or resistance to break through to a new all time high (GLB, see blog glossary), is showing real technical strength.

When I speak publicly to audiences of investors I often begin by asking them to raise their hands if they buy stocks at new yearly highs. Typically, fewer than 10% say they do. I then tell them that I only buy stocks at all-time highs! By the end of the semester my undergraduate students have all embraced this strategy.

To show you the evidence that GLB’s can work, I am providing below a set of examples using weekly charts. I find that weekly charts are preferable for viewing trends and for keeping me from being shaken out of strong stocks. (I have been told that the great William O’Neil preferred weekly charts.)

Of course, not all GLBs work out. One can never know in advance if a GLB will lead to a significant advance. It does help if the stock showed above average volume at the break-out. I have a strict rule to sell a stock immediately if it comes back below its green line. If I buy because of a GLB, I must get out immediately if the signal fails. It is folly to hang on if the primary reason for buying fails! No hesitation or remorse, because I believe that each loss brings me to the next gain. In some of the examples below there was a GLB failure and a subsequent successful GLB. I find buying back a stock that I exited, after it shows a new buy signal, can be very profitable. It makes sense to buy back a stock that I have evaluated and researched and not to abandon it just because my initial timing failed. (There must be no ego in trading–I accept and study my mistakes.)

Because there have recently been more than 200 stocks hitting yearly highs each day, I have reinitiated the GLB Tracker list to the right to this page. This is a list of stocks that had a GLB in the past week that I will monitor. The date in the table is Friday and not necessarily the day of the GLB. I keep this list as an indicator of how likely recent initially successful GLBs are continuing to rise, not to serve as a buy list. Stocks on the GLB Tracker list need to be researched and evaluated for possible purchase and are not automatic buys. Moreover, I do not have to buy on the exact day of the GLB. The examples below clearly show that if a GLB stock is followed by a few weeks of advance there are many new opportunities to hop on (perhaps at the 4 or 10 week moving averages), as long as I set reasonable sell stops to protect my capital. (Setting stops and exiting is based on one’s personal tolerance for risk and cannot be rigidly defined for everybody, so don’t ask me how to do this.) Study these examples:

 

One more observation–if one is fortunate enough to hop on a successful GLB stock and pyramid one’s position, it might be a good strategy to stay aboard until it closes below its rising 30 week average (solid red line in charts). It takes patience and discipline; that is how fortunes can be made….

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

 

 

 

 

 

 

 

 

 

Performance of GMI and $QQQ since 2006; Re-entering market

GMI6/6
GMI-28/8
T210865%

As you know, each weekend I post stats for my General Market Index (GMI), a collection of 6 indicators that help me to gauge the market’s trend. The GMI signal turns green after two consecutive days above 3. It then turns red after two consecutive days with readings less than 3. I am posting below two charts showing the QQQ during the periods when the GMI signal was red or green. I do not necessarily act quickly on a change in the signal, but the GMI does influence my trading greatly.

With the GMI signal turning Green, and the SPY breaking out of its descending trend line and above its 10 and 30 week averages, I started wading back into the market in my trading account and my university pension last week.

And here is the GMI table.