Blog Post: Day 13 of $QQQ short term up-trend; 85 US new highs and 227 new lows; $QQQ 10:30 weekly chart is strong, see how I read it

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This weekly chart usually alerts me to market turns. QQQ is closing (gray line) above the 10 week average (dotted line) which is above the 30 week average (solid line). And the 30 week average is beginning to turn up. This would also be considered a beginning Weinstein Stage II up-trend. All recent market bottoms have this pattern. As long as the 10 week is rising above the 30 week average the up-trend is intact. Note the 2021 top. The first sing of weakness is a weekly close below the 30 week average.

Note the beautiful 2020-2021 bull market.

Blog Post: Day 11 of $QQQ short term up-trend; GMI= 6 (of 6); Time to abandon low risk income and buy stocks/ETFs; Mutual fund window dressing is over, on to earnings, see list of 18 growth stocks at ATHs

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Everyone is talking about hiding in safer FDIC insured money market accounts now that one can earn 4%+ in interest, risk free. I told you in November, 2021 that I was exiting the market because the Fed would raise interest rates and that would suck the $$$ out of stocks. Now get ready for the reverse. We are closer to a decline in rates and that will eventually cause money managers and the public to return to stocks again. It really is that simple. The Fed tightens too much and then slashes rates to get the economy going again. Read the late Martin Zweig’s classic book.

In addition, my GMI (see table below) has now gone to the maximum value of 6. I protected myself from the 2022 decline and am now ready to move back into equities. In my university pension I have begun to transfer out of money market funds and back into mutual funds.  In my trading IRA I will begin to buy ETFs and a few growth stocks. I only buy stocks that are above their last green line and trading near their ATHs. The great winners bought by Darvas and O’Neil were stocks going to ATHs. I do now want to buy fallen angels that are turning up or building bases.  If they can make it back to ATHs I will consider them. Any stock that can come through 2022 at an ATH is showing incredible relative strength and proof of buying by the big boys.  On Friday, there were 18 stocks on my watchlist of stocks recently appearing on IBD/MS lists that traded at ATHs. (I omit cheap or low volume stocks.) This list contains possible market leaders and bears (bulls) watching. (I own some.)

The list is sorted by the last column, Friday’s closing price divided by their lowest price during the past 250 days. Thus, ELF has the highest value of 4.0. Any stock that is hitting an ATH and is trading 4x higher than its yearly low is worth considering. So is INTA, at 3.3x, a recent IBD New America stock, which I wrote about last week. Remember, both Nicolas Darvas and O’Neil’s protege, David Ryan, preferred buying stocks that have already doubled. I want to jump on rockets that have been launched and are heading to the moon, not those  close to the earth.  Note also the next earnings date column for each stock.

Last week was the end of the quarter when mutual funds dress up their portfolios with the strongest performing stocks. Their end of quarter reports will then show them owning the winners, but do not state when they purchased them. So they look like smart investors to persons reviewing their fund.That is one reason why growth stocks did so well last week.  With earnings season coming up we are likely to see more advances. However, remember we are also approaching the Sell in May period which will coincide with the debt ceiling battle. There may be an opportunity to increase positions during this summer’s hysteria.  For now, I am following my market indicators. See the GMI table below.

 

 

 

Blog Post: Day 7 of $QQQ short term down-trend, likely to end Friday; 42 new US highs, 367 lows and 8 at ATHs; Two stocks I wrote about on Tuesday evening as having a GLB rocketed higher on Thursday to ATHs, $ANET, $CDNS, see daily charts

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My Green Line Breakout (GLB) indicator is for me a great way to identify leading stocks. On a monthly chart I draw a horizontal green line on the top of the price bar that reached an all-time-high (ATH) that had not been surpassed for at least 3 months (3 bars). Think of it as a rocket that has climbed to a peak and then rested for at least 3 months. When the stock finally closes above the green line, a GLB, it can be the start of a major advance because the stock has overcome all of the selling by persons who had bought near the higher prior peak. I showed in my Trader Lion 2022 presentation that most of William O’Neil’s huge winners had begun with a GLB.  After a bear market, the number of stocks near an ATH are few. The last 5 days have had fewer than 10 out of more than 6,000 US stocks trading each day at ATHs. (I don’t count stocks under $20 or with negligible volume). Once the GLB occurs, hopefully on above average volume, if I bought, I sell if the stock CLOSEs below the green line. That is a failed GLB. If the stock retakes the green line the rise may resume and I may buy it back. See these daily charts for examples. CDNS had several GLBs which failed and then found support along the green line. ANET also had a failed GLB before taking off.

This monthly chart shows where I draw the green lines. Once I draw a green line I place an alert in TC2000 to tell me when the stock trades through it.