52nd day of $QQQ short term up-trend; Market indexes extended

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I learned this idea from my stock buddy, Judy. Whenever a rising stock or index floats above its rising simple 4 week average (the weekly low is well above the average), that security often times is extended and  it reverts to the average. This weekly chart of the SPY shows times in the recent past when this index ETF has become extended according to this definition. The red dotted line is the 4 week average. We may be facing a consolidation or brief pause now as DIA and QQQ are also showing this pattern.

 

35th day of $QQQ short term up-trend; $IPGP soars; $DIS strong

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IPGP, a stock that I have been watching at the suggestion of my brilliant stock buddy, Judy, rose nicely on Monday. I tweeted about it (@wishingwealth) early Monday morning when it moved up on unusually high trading volume, and I nibbled at it. Note the recent GLB to an all-time high.

Why is DIS showing such strength?

Going long—FFIV and other Darvas Scan stocks

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Now that the GMI is 6 and many stocks are hitting new 52 week highs again, I am looking for strong stocks to buy.   As you know, I prefer to buy stocks that have already doubled in the past year and that are trading at or near their all-time highs.   I also want the stock to have appeared on the IBD New America or IBD100 list.   FFIV meets all of these criteria.   It is also a concept stock selection of my talented stock buddy, Judy.   The weekly chart has the technical characteristics I look for, although the stock is extended on a daily basis. Finally, the stock appeared on my Darvas Scan that identifies stocks that have many of the attributes he liked. Below is the monthly chart of FFIV showing that the stock has recently burst through its all-time high reached in late 1999. (Click on chart to enlarge.) I purchased a little of FFIV and will add to it if it keeps rising.   Other stocks that appeared on Wednesday night’s Darvas scan include:   OPEN, APKT, VIT, BIDU, NTAP, ARMH, HWK, GSIT and IDSA.   I own some of these.   Please do not ask me to post my Darvas Scan.   In the future I will post promising stocks that come up in my scans.

Tech Stocks Decline, Will Channel Hold?

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Thus far,   tech stocks, as measured by the ultra 3X ETF, TYH, are declining within the channel I have been watching for several weeks.   The question, which my stock buddy, Judy, raised when I first posted the channel was, will the bottom of the channel hold as it has in the past?   No one knows.   The key for me   is to wait for the reversal, and to then wade in slowly, with stops below the low of the bounce.   Meanwhile, the Worden T2108 Indicator is now in neutral territory, at 58%. Only 19% of the NASDAQ 100 stocks have a MACD that is above its signal line, the lowest percentage since last November’s decline. The low in this indicator last November was 9%. The key for me is to remain defensive, and to cut losses before they grow too large.

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TYH signaling short term tech decline? QQQQ in up-trend; AAPL and IMAX break out.

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I thought you might like to see why we may be at the beginning of a short term decline in the tech stocks.   TYH is the 3X ultra long tech ETF and it appears to be in a rising channel.   TYH   recently hit the top of the channel, which   has been followed by a decline four times in the recent past. Nevertheless, the tech stocks remain in a longer term up-trend. The question is whether to sell a little now, or just hold on to see if the channel holds.   Regardless, it seems to me that this may not be the time to take on new tech positions.   Much better to buy closer to the bottom of the channel, if it holds.

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But the long term Stage 2 (a la Weinstein, see his book to lower right) up-trend remains intact.   Note, however,   that the QQQQ does appear to be a little extended on this weekly chart too, having closed at the bottom of its last 5-day range.

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Even as AAPL breaks from base. (All charts built using Worden TC2007)

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Note on this daily chart that IMAX broke out to an all time high last week (on huge volume).   My extraordinary stock picking friend, Judy, has been talking about IMAX since the stock was around $2.   She of course bought it way back back then.   It takes a while for the rest of us to catch up to Judy.   She says the technical innovations   in the recent 3D IMAX release, Avatar, is as big as when movies went from black and white to color.   So, I own IMAX and am watching the story unfold.

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QQQQ down-trend continues; Amazon kindles an impressive gain

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There were 3 new highs and 106 new lows in my universe of 4,000 stocks on Wednesday.   The QQQQ completed the 17th day of its short term down-trend.   It would have to rise a lot more to begin a new up-trend.   Still, I cannot resist buying an occasional strong stock during a counter trend rally. One stock I own a little of is AMZN, a stock championed by Judy.

AMZN had a huge gap up on January 30th when it beat earnings estimates, then consolidated for several weeks.   (Looks like a head and shoulders bottom?) Today, AMZN appears to have broken out again.   AMZN has a great new product in the Kindle 2 digital reader.

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GMI and GMI-R are back to zero, QQQQ in new down-trend; TSYS and GLD; short or in cash

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The GMI and GMI-R have been zero since Tuesday’s close.   There were 3 new highs and 424 new lows in my universe of 4,000 stocks on Wednesday. The Worden T2108 Indicator is now 21% and heading down from the reading of 89% on January 6.   In the November swoon, this indicator bottomed at 1.2%.   So we have a long ways to go to hit the same depths present at the November bottom.   The QQQQ is now in the 2nd day of a new short term down-trend.

If you go back a few posts you will see that I wrote that TSYS looked like a break-out from a cup-with-handle formation.   Well, that stock continues to surge higher and hit a nine year high ($9.93) on Wednesday.   William O’Neil has said not to buy break-outs in a bear market, but this may be the one needle in a haystack that will work out.   I continue to hold a few shares of TSYS…..

I am also holding puts on some stocks in my IRA.   One cannot use margin in an IRA so I cannot short stocks there.   But I can buy put options or inverse ETF’s.   I don’t know if it is too late to short weak stocks, but I know that buying stocks that are in down-trends has not worked for me.   Then again, my friend Judy does so well buying stocks that bounce off of their lows.   In fact, she recently bought GLD in the 70’s and still holds some.   Gold and silver (SLV) have been steadily advancing.   I remain mainly in cash.