My Favorite Posts

Higher interest rates will slay this bull–monitoring $GLD $TLT

@ 9:05 pm
GMI6/6
GMI-28/9
T210859%

Over the past 50+ years that I have traded in the market, I have witnessed how Fed raised interest rates can kill a bull market. The risk from higher rates is extremely high now. This is because boomers, who are approaching retirement and own much of the wealth, would seize the opportunity to earn 3%+ on their money if it could be invested in relatively safe US treasury bonds. They will flee risky stocks in order to hang onto their portfolio gains achieved since 2009. So when the 10 year treasury bond, currently at 2.43%, gets to 3%, we should watch for signs of a market top as money is sucked out of stocks. The rush to the exits may result in a panic. (Right now, the GMI is strong and there are no signs of technical weakness, see table below.)

I therefore keep an eye on interest rates by monitoring the 20 year treasury bond ETF, TLT. As TLT falls, interest rates rise (Rate= Annual pay-out/TLT price), and the price of gold falls. This association occurs because international investors buy dollars with which to buy US bonds to earn the higher interest rates.  As the dollar rises in value the price of gold falls (it takes fewer appreciated dollars to buy an ounce), barring a general rise in investor fear. The daily chart below clearly shows this correlation between TLT and GLD–it is difficult to tell them apart. Note that both have been falling since early September, reflecting a move to higher interest rates. (By the way, it looks to me like we may get a rebound in TLT and GLD from oversold readings this week as the Fed meets.)

The GMI remains at 6 (of 6) and the GMI-2 is back to 8 (of 8). My conservative pension funds remain fully invested in mutual funds–for now. But I have seen some markets top early in the new year and it is currently opined that investors may be waiting to take gains in 2018 when tax rates could be lower than those in 2017. This strategy could create a rush to the exits in January…..

 

Yellowband scan picks up $UCTT, $NVDA, $FSLR, HNH, $LOXO, $EXEL, $NVMI, $CORT

@ 7:46 pm
GMI6/6
GMI-28/9
T210860%

Given my renewed interest in yellowband stocks, I created a simple scan that looks for stocks up at least 70% from their 50 week low, are within 20% of their 20 week high, are in a yellow band pattern and have regained their 10 week average last week. One of the interesting stocks to satisfy these criteria is UCTT. This weekly chart shows that UCTT rose on above average volume last week, is above its last green line top, and may be emerging from a cup and handle base. Note also from the statistics at the top of this chart that its most recent earnings were up +2850% with revenue up +76% and that the stock has already quadrupled over the past 12 months. Its next earnings are to be released on 10/25/2017.

This weekly yellowband chart shows UCTT was in a multi-month yellowband pattern with the stock closing (solid line) above its 10 week average (dotted line), which was above its rising 30 week average (red line). The purple dots indicate the weekly lows and show that the lows each week tended to be above the 10 week average until the stock formed the recent base.

If I bought UCTT based on its yellowband pattern, I would consider selling or reducing my position if it closed any week (or day) back below its rising 10 week average. Other noteworthy stocks to come up in this scan were: NVDA, FSLR, LOXO, EXEL, HNH, NVMI and CORT.

You can run this scan yourself (09162017yellowband…..)  in TC2000 by joining my club and also get some of my other scans. Just go to www.wishingwealthblog.com/club. The glossary on this blog describes the logic of most of the scans. And follow me on twitter @wishingwealth for intraday alerts–all of this information is for educational purposes only, no guarantees of any kind! Remember, most successful traders are only right on about 50% of their trades.

The GMI  is at 6 (of 6) and the GMI-2 is 8 (of 8). I am watching inflation indicators closely to see if the Fed may tighten sooner than everyone expects. That will kill this bull…

 

 

 

$INGN 2014 GLB moving up after taking a breather

@ 7:47 pm
GMI6/6
GMI-26/9
T210845%

On December 29, 2014 I posted the following about INGN:

“My great stock picker friend, Judy, knows someone who needs to be on oxygen. Judy discovered that there is a product made that is very mobile, light weight and has a great battery. She claims that it beats the competition and makes a huge difference to people who must be on oxygen. So Judy researched the product and identified its manufacturer, INGN. Judy does very well by picking stocks that have a great concept underlying their product. She bought some INGN.

INGN is a recent IPO and is scheduled to make some investor conference presentations in mid-January.   The stock may therefore be volatile in the coming weeks.   Nevertheless, I bought some INGN. By the way, INGN had a green line break-out in November, consolidated, and then moved up. Check out its weekly chart. It has already doubled.”

INGNweekly

This weekend I was watching TV and saw for the first time an ad for INGN’s mobile oxygen unit. It showed one person bogged down because he was connected to a traditional oxygen unit and another going about town with INGN’s portable mobile unit. Judy told me about Inogen’s  great concept 3 years ago. Unfortunately, I rode INGN for only a short time, much less than Judy did. I was shaken out in 2015’s decline. My mistake was to not buy it back when it recovered and had a new green line break-out at $55.98. One must always continue to monitor promising growth stocks that undergo a decline to see if there is  a new GLB. Check out this monthly chart of INGN. At the time of my post in 2014, INGN was at $30.25. INGN closed Friday at $103.05. Maybe their new advertising campaign is going to breathe new life into the stock. A lot of boomers will need to be on oxygen in coming years–or even after a hurricane…

My experience with INGN shows the virtue of investing in companies with innovative products. A company with a great concept and strong technicals is much easier to invest in and hold for the long haul than an investment based on just a good chart.

The GMI remains at 6 (of 6):