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Blog Post: Day 28 of $QQQ short term up-trend; $QQQ very oversold and bounce likely; GLB: $CLH, how I buy a GLB automatically

@ 9:24 am
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QQQ reached very oversold levels yesterday last seen in June before the recent rally began. 53% of NASDAQ100 stocks had  a daily 10.4 stochastic <20. Last June 16 at the bottom,  85% traded that oversold. Since June 24 only one day had more than 10% of NASDAQ100 stocks with such the stochastic<20. The GMI remains Green and the QQQ short term up-trend remains intact for now. However, a few more declines in QQQ could end the short term up-trend. With the futures up this morning, we may get an oversold bounce.

I had noticed a few days ago that CLH, a stock brought to my attention years ago by my stock buddy, Judy, was approaching a GLB at $118.89. How could I buy it if it traded through that price without being glued to my monitor? Nicolas Darvas had the answer. He was busy dancing around the world as he made 2 million dollars ($20 million in today’s dollars) in 18 months in the late 1950s. His classic book is listed at the end of this blog. Because Darvas could not spend his time following his stocks with his broker, he had no personal computers, he used buy stop orders. Once he had figured out a possible break-out price he had his broker enter a good til cancelled buy stop order. This meant that as soon as the stock traded at the price he specified his order to buy shares was entered as a market order. Darvas said that the buy stop order was a critical tool for him.

A buy stop order is  potentially dangerous because it normally tiggers a market order to buy. If the stock opens up way above the stop price one would have to buy it at the higher price.  I trade in my IRA and my broker does not allow buy stop orders in that type of account. Instead I can order a safer buy stop limit order. A few days ago I entered an order to buy CLH on stop at 118.95, limit 120. That way I will not buy it above 120. It was executed automatically at 119 and closed the day at $122.27. I now have to decide where I will exit if the GLB fails. (I could also have entered a stop loss order to be executed automatically once the buy stop limit order had been executed.) Be careful, because once one buys the stock it could reverse down quickly and  be stuck with a loss. So it is good to monitor one’s executed trades sometime during the day. Darvas probably would have done so if he had a hand held computer back then. Here are daily and monthly charts for CLH.

 

 

Blog post: Day 21 of $QQQ short term up-trend; GMI has been 6 out of 6 for 4 days; set-ups are working, look at $AAPL and create your own and share it!

@ 9:13 am
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I have written before that the best time for me to go long is when the GMI is on a Green signal. It has been Green since 7/21. Since then QQQ has advanced +8.35% and 83% of its stocks have gone up. The median change of the Nasdaq100 stocks is +7.5%.   The GMI rose to 6 (of 6) on August 10 and my set-ups are working again.

Study this daily chart of AAPL with its exponential 8 and 21 moving averages and see if you can make up rules for trading a rising stock. When would you buy and when would you sell? Next test them out on other stocks to confirm you have something tradable. Share your set-up with others in your comments. Last post I gave you a hint on what I do.

 

 

 

Day 20 of $QQQ short term up-trend; GMI=6 (of 6) and many stocks are breaking out; My analysis of $GNRC and $DGII

@ 5:05 pm
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As long as the QQQ remains above its 30 week average I am trading stocks. I will not transfer my university pension funds back into mutual funds for a little longer, however. The market bottom could really be in but if the Fed starts to raise rates repeatedly again it could kill the rally. I would like to see a retest of the bottom. And many bottoms occur after October weakness. Remember the famous saying, Go away in May and come back at Halloween!

So many stocks are rising now that I can’t resist some.  One stock that I am slowly accumulating is GNRC. My stock buddy, Judy, brought this company to my attention years ago. Generac makes electric generators and is also working with solar. Whenever we have bad hurricanes the stock tends to rise. And we are entering hurricane season. I am not trying to benefit from people’s misfortunes, only from a company making profits by helping customers to retain their electricity. How shocking!!!! (pun intended)

MarketSmith says 2022 earnings are expected to grow 26% and their latest quarterly earnings and sales were up 25% and 40%, respectively. Below are a few charts that helped me to analyze GNRC’s trajectory.

The monthly chart shows that the stock is below its last green line top, which is a negative for me. There are many people who bought higher that may want to sell if they can get their original investment out. But it is a seasonal rally that I am looking for. It may not take the stock back to an ATH. And maybe it will…

 

The weekly chart shows some evidence of strength. There are some big black above average volume bars at the bottom and the stock has retaken its 30 week average, a very good sign. Note it closed near last week’s high.

I also like the daily chart. Thanks to listening to Richard Moglen’s interview with Pat Walker and his appearance at my class,I have recently become a fan of the 8 and 21 day exponential moving averages. I also know that the IBD/MS folk follow the 21. Note that the 8 day exponential moving average has been above the 21 day exponential average for 18 days and bounced off of the 8 three trading days ago on Wednesday. A few days ago the stock took a big hit after earnings were released but it has recovered almost all of the decline, another sign of strength. As long as the stock holds its rising exp 8 average I believe that the up-trend is intact.

I have created a new scan to find promising stocks that just bounced up off their exp 8 day average. Here is a chart of one of them. DGII also had a recent high volume GLB, a big plus. I do not own it but let’s see if the bounce holds next week. Note how many bounces off of the rising Exp 8 it has had. If I purchase on a bounce set-up I must sell immediately if the bounce fails. Other stocks that came up on this scan are: CNC, LMT, MLI, SO and ENPH. These are not recommendations, just for teaching purposes. I always check IBD and MarketSmith statistics before I buy anything.

 

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