Wishing Wealth Blog

My weekly green bar scan finds stocks that have recently reached an ATH, have 4wk>10wk>30wk averages and 4 wk avg is rising and stock bounced up off of the 4 wk avg this week and closed up today. Their relative strength vs SPY also must be at a 20 week high. And they must be >$30. I ran this scan on my watchlist of stocks recently listed on IBD50 or MS growth250 lists. I found only 6 stocks out of 782 passed the screen. They are ranked by close today/close 250 days ago. Thus, CEIX and LNTH have  tripled over the past year.

Here is a weekly chart of CEIX. Note that this week’s price bar is green and check out the 4,10,30 week averages. A rising stock will repeatedly close the week above its 4 week average. If I buy a green bar stock I place my stop below the low of the green bar and may move it below each successive green bar. Note CEIX had a GLB 5 weeks ago and the 10 week average (red dotted) is climbing nicely above the 30 week average (solid red). This is my favorite yellow band rocket stock pattern. A close below the 10 week average would also cause me to exit.

I do not trust a change in the QQQ short term trend count until it reaches the fifth day. Our analyses from 1990-2021 showed that 23% of QQQ short term up-trends lasted 5 days or less, or 77% lasted longer. After 5 days these short term trends tend to last. However, the GMI=4 and if it registers 4 tomorrow it will turn Green.

Can this really be a tradable bottom? No one knows for sure. However, I think most people are betting that the Fed will overly tighten and bring on a recession and the market will go lower. But Mr. Market tends to fool most of the people. So maybe something else is going to happen?  Even something better than most think? The key is to sit back and see if the market can establish a real Stage 2 up-trend. For now, I buy a little TQQQ and will slowly accumulate more on the way up. If QQQ falters I will quickly sell.

Meanwhile, look at the 24 stocks in  my IBD/MarketSmith watchlist that hit an ATH today and passed my scan. They are presented in descending order of how much they have increased since 250 days ago. Thus, AMR is 7.73 times its price a year ago. Eight of these stocks have already doubled. Remember, the highly successful trader, Nicolas Darvas, liked to buy stocks that have already doubled, as does O’Neil protege, David Ryan. Will any of these stocks prove to be the new market leaders? Stay tuned…….

As my readers know, I like to buy stocks when they have a GLB to an ATH. Once a stock has a peak that is not surpassed for at least three months I draw a new green line. This monthly chart of AAPL shows 3 GLBs where it would have been profitable to buy AAPL. Now that a new green line as been drawn at 182.94, I would not buy AAPL until it breaks above that green line. You may think that you should buy it much lower. But you never know if a stock can climb back above its green line, until it does. Check out AAPL and then MSFT to get the point.

Once MSFT formed a green line top in 1999, it took until 2016 for it to have a GLB. That is a long time to wait for a stock to come back when one could have instead bought other stocks having a GLB.