Wishing Wealth Blog

I am writing this post to show my students a way to evaluate a company that comes to one’s attention because of strong technical action. TC2000 showed me that INSW is one of four stocks that hit an ATH on Monday and that it came public in 2016. INSW had a GLB with above average volume on 9/6, closed below its green line the next day and retook it on 9/8. It advanced to a new ATH on Monday with the highest daily volume since last April. Note how INSW has found repeated support at the 8 day exp average (blue dotted line), which has been climbing above the 21 day exp avg. since mid-July. Its price has doubled from a year ago, a nice sign of technical strength.

MarketSmith shows the company to have a composite rating=98, Acc/Dis=A+ and group RS=98. While it has not made a profit yet, sales were up triple digit the last two quarters, fund ownership is climbing and expected earnings per share this year are $5.03. This shipping company is becoming profitable with a projected P/E ratio around 7. If  I made a pilot buy today I would  place my sell stop below today’s or yesterday’s low.  Any stock that can come through this market at an ATH is showing incredible relative strength.

Note the weekly RWB up-trend.

The weekly chart shows INSW is in a Stage 2 up-trend and closely following the rising 4 wk avg (pink dotted line). It has closed the last 11 weeks above this average–a sign of a rocket stock, as long as the 4wk>10wk>30wk averages.

Market could fall to last green line break-out at 295.87 (GLB) which occurred after the pandemic decline,  in November, 2020. A decline below that green line could induce heavy selling and a market bottom. But we do not need to predict, just to react after a bottom is firmly in. But how  will  we  know  that?

Looking back to the 2020 bottom, this weekly 10:30 chart of DIA shows how to discern a bottom. The 10 week average (dotted line) turns around and climbs above the 30 week average. Once that happened one had 1.6 years to ride the up-trend until the 10 week average closed back below the 30 week, see chart below.  One does not have to catch the bottom. Wait until it is in place before risking one’s fortune by going long.

Here are similar charts for QQQ and SPY. Same patterns. So sit back in cash or treasury bills and wait. Sitting is the hard part, as Jesse Livermore more eloquently said. (The gray line in the charts is the weekly closing price.)

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For you skeptics, here is the 2009 bottom in QQQ. There was an earlier head fake in 2008. When that happens you get in and then exit when it fails. The gray line should remain above the 30 week average. In 1929, Bernard Baruch got in and out of the market several times until he correctly nailed it by going short.

Not using charts before one invests is like driving to an unfamiliar location without a GPS, or waze……….