ETF

GMI: 6; IBD 100 performance; AAPL and GOOG

@ 12:01 am

The GMI held at 6 even though few stocks rose on Friday.   There were 203 new highs in my universe of 4,000 stocks and only 13 new lows.   38% of the Nasdaq 100 stocks advanced on Friday, along with 46% of the S&P 500 stocks and 66% of the Dow 30 stocks.   Gmi1020_1 The QQQQ has now closed above its 10 week average for 10 weeks and Friday was the 45th day in the current QQQQ up-trend.   Since August 16, the QQQQ has risen 8.9%, and 73% of the Nasdaq 100 stocks have advanced;   41% advanced more than 10% and 25% advanced more than 15%.   During this same period, the ProShares ETF that attempts to double the performance of the QQQQ (QLD) advanced 16.9%, while the similar “ULTRA” ETF for the S&P 500 index ( SSO) rose 10.9% and the ETF for the Dow 30 index rose 11.7%.   Hence, by simply buying the QLD when the GMI signaled a rise and holding on during this rise, one could have received a 17% return–a return that beat 84% of the Nasdaq 100 stocks.   By buying the Ultra QQQQ ETF, I can beat 84% of the Nasdaq 100 stocks.   Why try to find the few individual stocks that outperform the QQQQ, when I can just ride the Ultra QQQQ ETF?   I can’t wait until the the GMI signals a down-trend so that I can switch to the Ultra short QQQQ ETF   (QID) and ride the QQQQ back down.

Meanwhile, the IBD 100 stocks have not done very well the past few months.   Ibdperf1020 On Friday, 38% of the Nasdaq 100 stocks rose, compared with 23-32% of four recent IBD 100 lists.   Only 43% of the stocks on the list from 10/16 closed higher than they closed on the day the list was published.   4% or fewer of the stocks on each list hit a new high on Friday, somewhat better than the Nasdaq 100 stocks (2).   74-82% closed above their average price of the past 30 days.   The four stocks on the list from 10/16 that hit a new high were :   HCSG, KNOT, AMX and TV.   The list from 10/2 included:   HCSG, KNOT, AMX   and CHL. The list from 8/14 added OKE. The fact that AMX was on all four lists suggests that this stock has had staying power dating back at least to 5/16.

I have been writing about GOOG and AAPL for sometime and have made some money trading them.   But I still make mistakes.   Last week with only days before expiration I wrote covered calls on AAPL and GOOG because the call options were providing incredibly high time premiums for just a few days, through Friday.   I wrote covered calls because I was influenced by some media pundits who said the market had to weaken, and by writing calls I limited my gains on these two stocks.    How many times do I need to remember to heed Darvas’ advice to eliminate all outside opinions from my trading.   When I just follow the market myself I do much better.   The opinions of others tend to destroy my judgment……………..

GMI:6; GMI-S; 100; IBD 100 Performance; RIMM, GOOG

@ 12:01 am

The GMI closed at 6 and the GMI-S rose to 100.  Thus all of my short term indicators for four index ETF’s (DIA, QQQQ, SPY, IJR) are positive.  The market weakened on Friday with only 30-37% of the stocks in the Nasdaq 100, S&P500 and Dow 30 indexes rising. Gmi1006_2  Nevertheless, 72% of the stocks in my universe of 4,000 closed above their 10 week averages.  The QQQQ is now in its 35th day of an up-trend.  If I had been listening to the media pundits, I would have missed this delicious rally.  Remember, the go away in May crowd returns around November.  Most market gains come between November and April. So why are so many market pundits bearish.  Did you note that several days ago when the market had a decline the put/call ratio hit 1.07.  Usually people become that bearish after a long decline.  To find higher volume in puts than calls shows how skeptical traders are of this market rally.  Remember, option traders  usually bet on the wrong side of the market.

I am introducing a new table on the performance of the IBD 100.  So many readers come to my blog because they are interested in this list that IBD publishes each Monday, containing the strongest stocks, according to their CAN SLIM technique.  While I like the CAN SLIM technique, I think that IBD overstates the perfomance of the IBD 100 stocks when it compares its IBD 100 Index to the S&P 500 Index.  IBD replaces poor performing stocks in the list each week with stronger stocks, thus biasing the results towards only stocks that do well.  In contrast, the S&P 500 index stocks change very infrequently.  So, the most valid way to look at the performance of the IBD 100 stocks is to look at how each individual list does over time.  This table shows that for the lists published on Ibdperf1006_1 5/16, 8/14, and 10/02.  It is interesting that only 30% of the stocks on the list published last Monday rose on Friday.  Furthermore only 65% of the stocks from 10/02 closed higher on Friday than they closed on the Friday just before the list was published.  The lists from 8/14 and 5/16 did much worse, with only 51% or 28% closing higher on Friday than on the date the list was originally published.  There were seven new yearly highs in the list from last Monday, and they are listed in the table.  Let me know if you want me to continue to update this table…..

RIMM is an interesting stock.  It gapped up on 9/29 when it raised its guidance for future sales and earnings. Rimm1006  I thought I had missed the stock.  But when I looked at its monthly chart I could see that RIMM has blasted out of a 21 month long consolidation and I bought some.  RIMM may be just begining its up-trend…..

Another stock that I think may be starting a run is GOOG.  It has been consolidating since last January and forming what looks like a triangle.  After a few false starts, GOOG may have broken out last week, and I bought some. Goog1006

Please send your comments to:  silentknight@wishingwealthblog.com.

GMI: 6; IBD 100 stronger; ProShares rule

@ 12:20 am

The GMI continues at the maximum level of +6. There were 337 new yearly highs in my universe of 4,000 stocks.  79% of the 151 stocks that hit a new high 10 days ago closed higher on Thursday than they did 10 days earlier.  Gmii1005 Thus, buying stocks at new highs has been profitable.  Only 65% of the Nasdaq 100 stocks rose on Thursday, along with 60% of the S&P500 stocks and only 43% of the Dow 30 stocks.  Thus, the market was much weaker on Thursday.  Thursday was the 34th day of the QQQQ up-trend and the QQQQ has closed above its 10 week average for eight weeks….

The IBD 100 stocks were stronger than the other stocks today, with 81% of the stocks on the list published last Monday advancing; 16 of them hit a new yearly high.  Over the past few weeks I have owned the QLD, which is leveraged so that it moves about twice as much as the QQQQ.  Since 8/15 when this up-trend began, the QQQQ has advanced 10.08%, while the QLD has advanced 19.92%.  It has been easy to make money just holding the QLD.  There is also an ultra ETF for the DIA.  While the DIA advanced 5.67% since 8/15, DDM advanced 11.69%.  These Ultra ProShares are the best kept secret on Wall Street.

Please send your comments to:  silentknight@wishingwealthblog.com.