I always have to remember not to anticipate a change in trend, but to wait for the actual signal. On Monday, the QQQQ went to the edge of support and held. There were 19 new highs and 8 new lows in my universe of 4,000 stocks on Monday. Only 3 of the new highs were on my IBD100 lists: VPRT, QSII and NPK. I have been writing about QSII for weeks. It broke out of a three year base in April and is at an all-time high. I own QSII. I also have a position in QLD, the ultra long QQQQ ETF. I intend to sell cash-secured puts in my IRA in early June if this up-trend remains intact.
The QQQQ is resting right on support. A decline on Monday would signal to me the beginning of a new short term down-trend. There were only 7 new highs and 8 new lows in my universe of 4,000 stocks on Friday. GOLD broke to an all-time high last week and GLD, the gold ETF, closed back above its 10 week average. This is an ominous sign, with the dollar in a down-trend. Buying stocks at new highs may not be a good idea now. Friday was the 42nd day of the current QQQQ short term up-trend. The Worden T2108 is now down to 79%. And most troubling, only 24% of the Nasdaq 100 stocks have a MACD above their signal line.
A lot of my cash secured puts expired on Friday. I am going to wait to take on new positions in June options around June 1. Better to be defensive now and not give back all of the profits made since the March bounce. I am mainly in cash again.
The QQQQ completed the 37th day of its up-trend on Friday. However, there were only 16 new highs and 5 new lows in my universe of 4,000 stocks on Friday. Five of the 16 were on my IBD100 lists: VNUS, GMCR, HANS, LINC and INT. All of these 5 but VNUS were also on the IBD New America page at some time this year. I keep a watchlist of New America stocks to look for possible winners. New America stocks are companies that IBD staff think have innovative products and exciting businesses.
Both Nicolas Darvas and IBD’s William O’Neil have written that winning growth stocks tend to have great stories behind them. Most of the New America stocks eventually make it onto the IBD100 stocks lists. So it is worth watching these stocks. INT was on the New America list last February around $31 and closed on Friday at $41.90. And HANS was written about last January around $34 and closed Friday at $42.55. So, stocks on the New America list often take off sometime after their story is published in IBD. One recent addition to the New America list that looks promising technically to me if it can break $18.60, is ASIA.