The GMI rose to 1 (of 6) and the more sensitive GMI-R to 4 (of 10). There were 5 new highs and 21 new lows in my universe of 4,000 stocks on Wednesday. The QQQQ will change to a short term up-trend, if it holds on Thursday. I sold my QID and bought a little QLD. I will accumulate QLD (the ultra long QQQQ ETF) if the up-trend gets going. The key is to start with a small pilot buy and to increase my position only if the trend continues. I also set close stops in case the trend weakens. In this way I have the greatest position (and risk) only after the movement is consistent with my initial purchases. I learned this strategy from the great Jesse Livermore (see Reminiscences book by Lefevre below), who made small pilot buys and then pyramided up only if the market confirmed his judgment. I never add to a losing position. I hope to get in on a trend that will last for weeks or months, not minutes or days.
ETF
Cash-secured puts did badly; Mainly in cash; GMI, GMI-R: 0; Financial Armageddon?
Are we near a bottom? Armageddon When three DOW 30 bank stocks, C, BAC and JPM, look like this weekly chart of BAC, I have to think that some kind of debacle is on the horizon. These declines came on huge weekly volume, indicating massive selling. When we factor in that these 3 banks and 7 other DOW 30 stocks fell more than 5% last week, I do not see a bottom, more like a black hole. Read on to see the graph:
I’m up 1200%, as my fellow boomers and college students get screwed again; QQQQ in 17th day of short term up-trend; GMI: 2; GMI-R: 6; T2108: 83%; 10 IBD100 stocks at new highs
I escaped 2008 with a small loss in my account (-5%). Not bad, compared to how the indexes did (down 35-40%), but not great, given that I did trade some short positions (with puts) during the year. On December 24, IBD published a table listing the performance of the best growth mutual funds since April, 1994. The top fund was up +382% since 1994. My IRA account remains up a little more than 1200% (13x) since late 1994, so I do not feel that bad about my performance this year. The key to my success is that I made money during the strong market rises and kept it, by being mainly out of the market during the major declines. I might add that while I traded in my IRA during the huge declines in 2000-2002 and 2008, I avoided major losses in my university pension plan by transferring from mutual funds into a money market fund during these declines. So, I have learned the painful lesson over my 40+ years of trading that the key to success is conservation of capital during the inevitable market down-trends. These declines can be detected long before they reach the panic phase when they become evident to everyone. I have developed rules for identifying the market’s trend early, that I post each market day in this blog, in the form of the GMI and GMI-R…..