My Favorite Posts

Blog Post: Day 16 of $QQQ short term up-trend; Buy $TQQQ on day 1 of this up-trend and it advanced through Friday, +29.5%, beating all but 4 of the Nasdaq 100 stocks and all but 3 of the S&P500 stocks–same incredible results again! See chart

@ 7:27 pm
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GMI-26/9
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I confess I did buy some TQQQ at the beginning of the new QQQ short term up-trend (green arrow on chart) and posted about it, but allowed myself to get shaken out on 1/19  (red arrow) and did not buy back in. Not buying back in compounded my first mistake. I need to let my computer trade for me because I let myself be shaken out even though my objective rules said that the short term up-trend was still intact :-(. See the daily chart of TQQQ below.

TQQQ even beat all but 4 of the 668 stocks in my aggregate watchlist of recent IBD50 and MarketSmith Growth 250 stocks! If you search my blog on “TQQQ” you will find that I have replicated this analysis and found similar results for years. Maybe it just does not pay for me to try to find winning individual stocks when I can just buy the 3x leveraged ETF, TQQQ. By the way, I also found 16 leveraged ETFs that beat TQQQ!  TSLL, CONL and KOLD were each up over 80%! Remember, however, these leveraged ETFs fall much faster than the underlying index or security when the trend reverses down, so you need a really good exit strategy, especially one better than mine!

 

The GMI signal remains Green at 6 (of 6). It flashed Green at the close on January 13. I post my QQQ short term trend count in the table below and on each almost daily blog post.

 

 

Blog Post: GMI turns GREEN and Day 2 of $QQQ short term up-trend; How I trade a GLB (green line breakout), 2 examples: $ACLX, $AGYS

@ 8:06 pm
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With its second consecutive day above 3, the GMI flashes a Green signal. Set-ups are beginning to work out. However, I am much more confident of the market’s new up-trend when the GMI=6. But it may take a while for the remaining 2 components of the GMI to turn positive. However, with the QQQ short term trend now up, I have started to accumulate some TQQQ in my trading IRA. Now that the media pundits are talking up dividend stocks, it may be time to go back into growth stocks?

You know that I  (and Nicolas Darvas and many leading traders) mainly buy stocks breaking out to an ATH after a period of consolidation. That is why I developed the green line break-out (GLB) set-up. I draw a green line on a monthly chart at the highest price bar ever reached after that bar has not been exceeded for at least 3 months (3 bars). I may or may not buy the stock the day it goes through the green line and closes at a new ATH. But one does not have to buy the stock on the day of the GLB. One alternative is to buy it after the GLB when it becomes oversold. Here is an example.

This monthly chart shows ACLX had a GLB in December. The green line was drawn at $26.91.

The daily chart shows the GLB on December 9. The next day it traded below the green line but closed the day above it. That is why  I sell a GLB only if the stock closes a day back below the green line. Note the gap and huge volume on the day of the GLB. If I did not buy the day of the gap, I could wait until the stock has an oversold bounce (OSB). The OSB is signified by the black dot. If one bought on the day of the bounce s/he could place a stop loss order right below the low of the bounce day, hopefully ensuring a small loss if it failed. Or one could wait for a close below the green line.

AGYS has a similar pattern. But it traded around its green line for a while.

I use TC2000 to find GLBs intraday and sometimes tweet notices @wishingwealth…..

The GMI is now 4 (of 6). The indexes are back above their 10 week averages. Stay tuned…..

 

Blog Post: Day 9 of $QQQ short term down-trend; GLBs often fail in market down-trends–$CALM is a prime example we can learn from

@ 9:48 pm
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I have often taught that the same set-ups that work beautifully for me in a rising market can fail miserably in a declining market. Model books of rising stocks can be very misleading because, by definition, most set-ups worked for these winners. With these model stocks that rise for months one could just buy every Monday or every x day and make money. There is nothing special about the set-ups. The authors never tell you how often the highlighted set-ups can fail. Here is a fine example.

Last Friday I saw that CALM had a GLB (green line break-out) to an ATH. Its green line peak was established in October, 2015. CALM was one of just 5 stocks trading Friday at an ATH. CALM closed Friday near the day’s high. On Tuesday it traded above its upper 15.2 daily Bollinger Band and reversed to close down for the day. On Wednesday it closed back below its green line. And on Thursday, after an earnings miss, the stock closed down 14.5%.  So how should one have played this GLB? First, one must sell immediately if a stock closes back below its green line. That is a failed break-out. Second, without a large gain to protect against a possible decline, one should never hold through earnings.

GLBs can be great set-ups. But during a declining market, one should be very cautious when buying stocks breaking out to ATHs. It takes an established advancing market for traders to feel confident to buy break-outs and to hold them for a sustained rise. NEVER fight the general market’s trend.