The GMI and GMI-R are back to 2 and 4, respectively. The QQQQ short term up-trend has continued for 6 days, and typically an up-trend lasts for a while after it passes 5 days. The Worden T2108 indicator climbed 22, to 54% and is now at its highest level since September 2nd. 73% of Nasdaq 100 stocks closed above their 30 day average, the most since August 28th. This market continues to gain technical strength. I find that I must tune out the media, who are embracing an ever declining bear market. Last weekend I became optimistic after studying my charts and then became very anxious when I listened to the Fox channel business shows on Sunday morning. The pundits tend to drive with their hands on the rear view mirror. The truck/car is moving up and I am slowly jumping aboard. I can always jump off when it changes direction. I am gradually accumulating the ultra long index ETF's, QLD and DDM. Two of the stocks on my IBD 100 lists hit a new high yesterday, CWT (a water stock) and ALGT (I own some). In addition, it looks like all of the cash secured puts I wrote about several posts ago will expire on Friday unassigned, and highly profitable for me. In early January I will consider selling a new batch of cash secured puts. My university pension funds will remain in cash until the longer term trends turn up. Until they do, I consider this to be a short term rally within a solid down-trend. But short term rallies are tradeable for me……
IBD
Uptrend to continue? Writing cash secured puts on promising IBD100 stocks; GMI: 2; GMI-R: 4
The QQQQ short term up-trend is now in its 4th day.
However, there were only 4 new highs and 100 new lows in my universe of 4,000 stocks on Friday. Still, 58% of the Nasdaq100 stocks closed above their 30 day averages. The GMI closed at 2 (of 6) and the more sensitive GMI-R is at 4 (of 10). I tend to look to buy stocks when the GMI rises to at least 3. Friday was the 4th day of the current QQQQ short term up-trend. In a few days I will have a better idea if this up-trend has legs……..
In an up-trending market (as measured by the QQQQ), I like to trade the IBD100 stocks. The IBD100 lists contain the top 100 growth stocks that meet the stringent IBD technical and fundamental criteria. A new list is published by IBD each Monday. From time to time, I create a watchlist in TC2007 containing the current IBD100 list. I now have a watchlist containing about 660 stocks that have appeared on selected IBD100 lists over the past year. The IBD100 growth stocks tend to perform quite well when the market is rising. Tonight, I ran a TC2007 scan I have created, on the stocks in this IBD100 watchlist and found 10 present or former IBD100 stocks that appear to be in strong up-trends: EBS,DLTR,ALGT,THOR,INT,APOL,AVAV,LHCG,SHEN,GTIV. I do own a couple of these. But I also have written cash secured put options on some of these stocks with strike prices below the support level . I am basically betting that the stock will not break below support by option expiration this Friday. If this technique works out, I will write more about how I do it in a future post. Writing cash secured puts is equivalent to writing covered calls on a stock, but I do not have to start out by buying the stock. The cash backing the puts I sell stays in my account in a money market fund and continues to earn interest. So, I receive the premium from selling the puts AND the interest from the cash backing them. Quite a nice (but not risk free) income generating technique in my IRA……
GMI: 0; GMI-R: 2; 62nd day of QQQQ short term down-trend; T2108: 21%; Some possible rockets
The GMI remains at zero (of 6) and the more sensitive GMI-R rose to 2 (of 10). There were only 11 new highs and 57 new lows in my universe of 4,000 stocks on Wednesday. The QQQQ is approaching a very critical resistance level. We will know in a few days whether the QQQQ can break out and whether a new short term up-trend is beginning. It is important to wait for the signal rather than to anticipate one. It could break either way. In the meantime, there are a number of technically strong stocks from the IBD100 lists the past year that I am watching: HMSY, SHEN, CWT, ASEI, INT, EBS, STRA, LHCG and PETS. I own small positions in some of these and will wait for the start of a QQQQ up-trend to buy more.