My post from the bear market bottom; weak TJX; GMMA shows QQQQ in strong up-trend

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“Last week, a person who knows nothing about the market asked me how to short stocks.   This is reminiscent of the  stories of the shoeshine boys providing stock tips, near the roaring 20’s market’s top.   The sentiment is just too negative right now.   Does this mean the market has to turn up?   Not necessarily, but the market is always an assessment of competing probabilities.  â€œ (Post on 3/8/2009, GMI: 0, T2108: 7%)

I wrote the above words last March, which turned out to be just as the market successfully tested its bear market lows and   began the current rise.   The Worden T2108 indicator was   in single digits, a rare screaming oversold buy signal.   When people around me who never traded asked me how to short stocks it turned out to be a key contrary signal that the market decline was near an end.   Similarly, I remember when a friend who knows little about the market asked me if he should refinance his house to invest in the market–back in 2000 near that market’s top………

I have noticed that the pundits have been saying that TJX , the discount retailer chain, is a good buy. I therefore was struck by the GMMA daily chart below, which is flashing warning signals. With the short term averages (black lines) now below the longer term averages (red), this is not a stock I would want to own.   It may even be a good short play.   You do know that analysts sometimes tout a stock so that their big clients can unload their long positions to the unsuspecting public. (The “NA” on the chart shows when IBD wrote about TJX in its New America column.) Another stock with similarly weak technicals is PWRD.

TJX--GMMA

Meanwhile, the GMI and GMI-R

Read moreMy post from the bear market bottom; weak TJX; GMMA shows QQQQ in strong up-trend

Some new rocket stocks to watch

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I used TC2007 to scan the market for stocks that meet my most stringent fundamental and technical criteria for rockets.   These stocks have great fundamentals and technicals, have already doubled their price a year ago and are near 5 year or all-time highs.   I have listed in this table the 11 stocks out of 4,000 in my stock universe that met these criteria.  Rocketstocks1218 All of these stocks had last quarterly earnings up at least 100%.   Coincidentally, all but 4 of the 11 are in my records as having appeared on the IBD100 and/or IBD New America lists during the past year. I have also noted in this table where I might place long term or short term stop losses on each long position.   The most conservative stop loss is the short term support level.   With a growth stock I rarely retain   a long position if the stock closes below its short term support level.   However, if I bought near long term support I might use the LT support level as my exit strategy.   I will return to these 11 stocks in a future post to show you how they behaved.   These stocks have already proven themselves as being in strong up-trends, but one never knows when an up-trend will end.   That is why I immediately enter a sell stop or buy a put option for insurance, after buying one of these high momentum stocks. I currently own 3 of these stocks.

Below is a Guppy Multiple Moving Averages (GMMA) weekly chart (click on chart to enlarge) of one of these rocket stocks, RDY. Note how all of the shorter term averages (black lines) are well above the rising long term averages (red lines). This is the type of technical strength I seek in a potential rocket stock.

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Meanwhile, the GMI and GMI-R remain at their maximum levels.  

Read moreSome new rocket stocks to watch

AAPL at critical point today

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Since I posted a few days ago a Guppy chart showing short term weakness in AAPL, the stock declined and then bounced on Wednesday.   The stock did reach a very low level on its daily stochastics (10,4,4) indicator and a   reversal of the short term down-trend is still possible.   However, I am waiting for a close back above its critical 30 day average to go long on the stock. The daily chart below shows that the 30 day average (in red) is curving down and for the first time since the rise began last March the 10 day average (dotted line) is below its 30 day average.   Both of these short term indicators are   bearish.   A close above 198.11 today would turn me bullish on the stock.   A bounce down off of the 30 day average and a close below 198.11 would make me very cautious on the stock. If the stock starts down today, it could have formed a short term double top, having met strong resistance around 208.   If/when it closes above 208-209, the up-trend will have likely resumed. Remember though, AAPL remains in a longer term Stage 2 weekly up-trend.

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AAPL daily Guppy chart looks ominous short term

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While still in a longer term up-trend, AAPL has closed below its critical 10 week average for the first time since its rise began last March.   (Daily volume has also tended to spike on the down days.) Since March,   AAPL has more than doubled. The longer term trend remains intact, but this daily Guppy chart shows that the short term averages (in black) are now heading down and penetrating   the longer term averages (red).   I closed out the puts I sold on AAPL and am now waiting on the sidelines to see if the down-trend deepens or reverses. Note that every long term decline must first begin with a short term decline.

AAPL daily guppy chart

Up-trend continues–check out the Guppy Chart of the QQQQ

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I received few comments regarding my trading philosophy.   Does that mean you all agree with me?   Your comments really do make a difference and inspire me to continue this blog.   So, please keep them coming.   In a few weeks I will begin teaching two courses on TA at the University of Maryland.   I expect that many of my students will be following this blog and I will probably post more content.   The GMI is at

Read moreUp-trend continues–check out the Guppy Chart of the QQQQ