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Blog Post: Day 30 of $QQQ short term up-trend; If one had bought $TQQQ on Day 1 of the $QQQ short term up-trend (on 4/28/23) and held it, by Friday it had advanced 29.6% and would have beaten all but 6 of the Nasdaq 100 stocks, see my analysis and a list of the few that beat it

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If one can ride a sustained up-trend in the QQQ with TQQQ, it is possible to beat almost all other stocks. From day one of the QQQ short term up-trend that I announced on 4/28, TQQQ has advanced 29.6%. Only six of the Nasdaq 100 stocks did better. See this list, ranked by performance from 4/28 through Friday’s close. Did you buy any of them on 4/28?

If you could have successfully picked these 6 stocks on 4/28, then just ignore this strategy and maybe tell the rest of us how you do it. For most mortals, however,  it is much easier to just buy TQQQ than to try to find the needle in the haystack that will outperform it. TQQQ also advanced more than all but 5 of the S&P500 stocks, shown below. In other words, TQQQ outperformed 99% of the S&P 500 stocks. I looked at my Market Smith Growth 250 watchlist from 4/13/2023, the watchlist closest to 4/28 that I have,  and found that TQQQ even beat more than 90% of those promising stocks.

The moral of the story is this. Buy TQQQ instead of trying to predict in advance the small percentage of stocks that will beat it. Please keep in mind that TQQQ is triple leveraged and moves 3x as fast as QQQ,  up or down. So one must have a valid indicator of the short term trend and know when to exit. I post my QQQ short term trend count almost every time I publish my blog and weekly in the GMI table below. (You can sign up to get my blog post by email, lower on this page.) This strategy has worked best if one buys TQQQ on Day one of a new short term up-trend and then pyramid up slowly. This is difficult to do  psychologically because on Day one, by definition, the market trend is reversing from a down trend and it is often hard to believe a real change is occurring.  The key is to start small on Day one and only add more TQQQ as the up-trend develops. If the new up-trend fails, I exit immediately. The media pundits who decry the triple leveraged ETFs just do not understand how well they work in sustained moves. SOXL advanced 57% during this period! While my TQQQ strategy has worked many times, past performance does not guarantee future performance, and be careful.

The GMI remains Green and is at 6 (of 6). I have been reinvesting my pension funds in mutual funds. At some point many of the people who withdrew from stocks in order to earn a “safe” 5% in their savings accounts will panic and race back into stocks at higher prices, when yields decline. So goes the game…..

 

Blog Post: Day 1 of $QQQ short term up-trend; GMI remains Green; It still looks to me like the market bottom is in, see charts and the new indicator added to GMI table

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We had an unusual 2 day long new QQQ short term down-trend last week. I had noted that 40% of short term down-trends last 5 days or less but this was a rare, very brief one. And the GMI came close to turning Red las week, but held. My 10:30 weekly chart below shows QQQ (and also DIA and SPY, not shown) remains with its 10 week average above its 30 week average. And now the 30 week average is turning up, a powerful sign of a beginning Stage 2 up-trend. This is the pattern of new longer term up-trends.

Here is the bottom in 2020.

And in 2019

And in 2009

But this whipsaw pattern happened in 2016, indicating that past performance does not guarantee future results. No indicator is 100% perfect and we need to remain flexible and nimble. But to me, the odds favor a new major up-trend–until they don’t. If the index (gray line) closes the week back below the 30 week average (red line) is is an early sign of weakness and all bets are off.

The GMI remains on a Green signal. I added a new statistic to the table: the number of weeks the QQQ 10 wk average has closed above its 30 wk average. This captures the prime signal of the longer term up-trend I noted in the 10:30 week charts I discussed above.

 

Blog Post: Day 26 of $QQQ short term up-trend; $WING flies to ATH, how I missed the GLB–true confessions, and see my green line rules

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As you know, I like to buy stocks that have moved to an ATH (all time high) have then rested, and then moved  up to a new ATH. That is the strategy of the greatest traders I follow. I draw a green line at the stock’s peak once it has not been surpassed for a least 3 months. When the stock stops resting and moves above the green line, a GLB or green lie break-out, I consider buying and holding unless the stock CLOSES back below the green line. I say closes because many times the stock trades below the green line intraday only to close back above it.  If the stock closes below the green line, it is a failed GLB and I exit immediately. If it retakes the green line and closes back above it I buy it back. Sometimes this dance goes along for a while until the stock finally takes off, often without me, as occurred with WING. When I draw the green line I immediately set an alert in TC2000 good for one year to tell me immediately when/if  the stock trades back above the green line. I and some of my former students then receive a text from TC2000 informing us of the break-out. After WING came up on today’s ATH scan I looked at my alert log and found the following.

 

On April 18, I received 3 alerts because WING had crossed above its green line! Three alerts, because I had mistakenly set multiple alerts over several weeks whenever I would look at a chart of WING. I am embarrassed to admit that I NEVER saw these alerts until today! I was too busy with other things and too down on how the market was behaving. Hopefully, some of the people who receive my alerts benefitted from these alerts.

The daily chart below shows the day of these 3 alerts. Note several prior failed GLBs. On March 18 WING closed above its green line ($187.35) and closed the next day at $187.43. Then it was off to the races.   Note the above average volume on March 18 and today–good signs. The train has left the station.

So what can you learn from my miserable mistake? It is salt in my wounds because I had bought and sold WING several times in March and incurred small losses. The famous Turtle Traders  (book appears at bottom of this blog) had a rule that said they had to act on every buy signal. The one signal you do not take after several fails is often the one that works. I do not know if WING will continue to fly. If I owned it I would sell if it closes back below the green line. And earnings are coming up on May 3. The last time earnings were released was in February when the stock gapped up and rose above the green line but then failed. The key is to continue to monitor stocks for a break out and not let your emotions or other things get in the way. Perhaps you can learn from this example and my rules below how to trade GLBs. Some, not all,  may work out if you buy them on the day of the GLB. Look at this shining example of APLS.

 

Don’t waste your time trading the fallen angels trading well down from their all time highs. Focus on those climbing to new heights. That is what Darvas and O’Neil did. Check out their charts of their biggest winners and you will see. In a weak market you have very few stocks trading at ATHs. Those that do can turn out to be the new leaders. Below are my green line trading rules for my students.