Wishing Wealth Blog

I have rarely seen my indicators whip-saw like this.  Only one US stock out of 7,022, PAG, passed my weekly green bar scan. Time to be in cash. QQQ is back below key daily moving averages.

And this weekly chart shows a steady down-trend with the 10 week average (dotted) below a declining 30 week average. We cannot fight the tide. How easy it was to profit buying stocks when the 10 week was climbing above the rising 30 week. It makes sense to me to wait for that pattern to reappear.

Similar story for SPY.

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…….