Wishing Wealth Blog

Market volatility continues

2013-06-18T02:25:13Z

Short and longer term trends remain up.

gmi: 5
gmi-2: 6
t2108: 40

11 Stocks at new all-time highs with good recent earnings; I remain cautious

2013-06-17T01:59:15Z

I ran my TC2000 new high and good recent earnings scan and the 11 stocks below came up. All are above their green line base tops and are therefore at all-time highs. I sorted them by price appreciation over the past 50 days. For example, USNA has advanced 50% over its price 50 days ago. Seven of the 11 have a blue flag, indicating they appear in one of the lists of stock I maintain that have been mentioned as promising stocks by IBD……

The GMI remains at 5 but my short term indicators are weakening. A close of the QQQ below 71.55 might turn my short term indicators negative. Stay tuned. I remain cautious and am hedging my long positions with some SQQQ (leveraged bearish QQQ ETF).

gmi: 5
gmi-2: 4
t2108: 36

IBD: Market up-trend resumes, so doe XONE

2013-06-14T01:34:17Z

After only two days since calling a correction, IBD now sees the market back in an up-trend. I am not the only one who can get whip-sawed by this market. The GMI Buy Signal remains in effect since late February. It will be important to see if the snap back rally on Thursday can continue into next week. Interestingly, XONE, came right back with the market on Thursday. I am holding this position, based on the exciting 3D printing concept. Note how XONE has found prior support at its 30 day average (red line). The ideal buy point for me would be at that average, but who knows if it will bounce there again? It all depends on the strength of the market.

gmi: 5
gmi-2: 3
t2108: 39

GMI falls to 3, IBD sees correction, getting cautious

2013-06-13T11:07:09Z

I had not noticed that IBD changed its outlook to “Market in Correction” on Tuesday. The GMI is now at 3. Remember, trend followers can only identify a top after it has occurred. One promising indicator is that the put/call ratio was 1.16 on Wednesday, and the market tends to bounce when the ratio is that bearish. The market rarely goes in the direction the crowd predicts, and the option crowd is clearly getting bearish, by trading more puts than calls. For now, it is best for me to raise cash and stops. The T2108, at 32%, is low, but not in likely bottom territory yet. The longer term trend remains clearly up, however.

gmi: 3
gmi-2: 2
t2108: 32

Buying some XONE–3D printers in space?

2013-06-12T00:34:29Z

My stock buddy, Judy, has been talking about XONE, which she bought a while ago. XONE was an IPO in February. It came public at around $23. Since then it has advanced to close at $51.91 on Tuesday. XONE markets 3D printers to commercial customers. And 3D printing in space is about to open a new frontier. Judy told me about 3D printers and DDD a long time ago. I wish I had acted on it! Better late than never….

Note XONE’s short life as a trading stock and that it managed to rise to a new high even during Tuesday’s rout! Such relative strength is very interesting….

gmi: 5
gmi-2: 3
t2108: 38

All indicators positive; A MINI move?

2013-06-11T01:24:56Z

By my count, Monday was the 34th day of the current QQQ short term up-trend. The T2108 is at 45%, in neutral territory.

MINI, a recent green line break-out stock, may be testing support at the green line. Check out its daily chart.

gmi: 6
gmi-2: 6
t2108: 45

Up-trend intact; 2-for-1 method for managing stock market risk; GMI based system to trade QLD leads the pack again; the TSLA break-out

2013-06-09T15:10:52Z

With the GMI back to 6 (of 6) I am looking to initiate more long positions. I bought some TQQQ on the bounce on Friday. I will add to it if the market continues higher.

During my vacation, I visited Powell’s Books in Portland, Oregon, one of the largest bookstores I have ever been in. They sell new and used books and I happened to find an old trading book (Guide to Conquering the Trading Markets) that described an interesting strategy for managing risk and setting stops. I later found an updated description of the method on the web. (However, the original description said that once half of the position was sold, move the stop on the remaining shares up to their original purchase price. That way, some of the gain is retained even if one is stopped out.) I am going to teach my students this method of trading next semester. Check it out here. Many of my students take a position, see it gain, and then give it all back and more when the stock declines. This method helps one to minimize losses and retain gains. I think it is very elegant……

You may have noted that my site has a link (to the right) to the darkliquidity site, which compares the performance of various market timing systems. Using my GMI signals to trade the leveraged bullish NASDAQ 100 Index ETF, QLD, is leading all systems this year, as it also did in 2012. You can check out this analysis by clicking here. I find repeatedly, and have posted many times, that a strategy of simply buying and holding a leveraged bullish ETF during a sustained up-trend beats trying to find the rare individual stocks that will do better. The key is to gradually enter the ETF as it climbs and to have strict rules to sell out promptly when it begins a sustained decline. By definition, these leveraged ETFs rise and fall much faster then their underlying index. I buy the SQQQ when the GMI gives a Sell Signal and the NASDAQ 100 Index begins to decline. Since the GMI flashed a Buy Signal on February 28, the TQQQ has advanced +28.6%, while the QQQ has advanced +9.4%. Only 7 of the NASDAQ 100 stocks advanced more than 29% during this same period, and many of them did not move much until May, suggesting one needed a lot of patience to hold them. Do we want to spend (waste?) our time searching for the 7% of stocks that will out-perform just holding the TQQQ?

Speaking of stocks that greatly outperform, TSLA has had a huge break-out, more than doubling in price in about two months. Consumer Reports just gave their car the highest rating possible. Perhaps some traders knew in advance that this would happen. How could we have identified this stock before it doubled?

By analyzing past winners, one can design rules for detecting new winners and getting on board at the right time. This daily chart shows what TSLA looked like shortly after its break-out in early April. Note that TSLA gapped up to a new all-time high (evidenced by trading above its green line top of $39.95 set in March. 2012) on extremely high trading volume. This critical move could have been identified by simply looking over the charts of stocks hitting new price highs on that day. During the 6 days following the break-out, TSLA re-tested the break-out by settling back to the green line (prior peak) where buyers came back in and supported the price. The stock then continued rising to a high of $114.90. I use TC2000 to scan the new high list each night for stocks that are breaking above a green line top or another multi-week base on unusually high volume. This is where I might find the next TSLA.

This weekly chart shows what TSLA did after the break-out. By definition, the new high list is where all true winners must appear over and over as they rocket to new heights. Since its break-out on April 1, I calculate that TSLA has hit a new high on 14 of 49 trading days.

gmi: 6
gmi-2: 5
t2108: 44

GMI and GMI-2 holding at 4; Stage 2 up-trend continues

2013-06-07T02:25:30Z

It’s nice to be back. The GMI Buy signal remains in effect. IBD sees the up-trend under pressure. The QQQ, SPY and DIA are bouncing up off of short term support. All averages remain in strong longer term up-tends. I tune out the news and pundit hysteria and let the market tell me its direction. It takes many weeks for a top to form and I see no evidence of one beginning to form. This weekly chart of the S&P 500 Index ETF shows the index to be in a strong Weinstein Stage 2 up-trend which began in early 2012. As long as the SPY remains above its rising 30 week average (red line) I stay invested on the long side. To learn more about how I use stage analysis, listen to my December, 2012 Worden TC2000 video, whose link appears to the right of this post.

gmi: 4
gmi-2: 4
t2108: 38

Next post: June 7

2013-05-25T13:49:43Z

I am taking a vacation and will return to post on June 7. The market is in a post-earnings release period and probably will not make a major move until sometime in July when 2nd quarter earnings are released. We do often have a shake-out decline just before the earnings period so we may have some weakness in late June. No one knows what will happen, however. If we get a major move, I will try to post during this period. It would take a lot of deterioration, however, to create a GMI sell signal. The market remains in a powerful up-trend, as this weekly chart of the SPY shows. It has successfully broken through its green line top. Major support for the SPY is way back around the green line or at 150 (red line, 30 week average). Have a great two weeks!

gmi: 6
gmi-2: 5
t2108: 63

GMI and GMI-2 decline to 5, up-trend intact

2013-05-24T00:23:45Z

Only 3 stocks came up in my new high and good earnings scan, two of which are above green line tops: DPZ and AAON. Under 100 stocks hit new highs on Thursday, down from 680 on Wednesday. T2108 is now in neutral territory at 64%. Over 200 stocks that hit a new high in the past month bounced from support on Thursday. Many of these would have been good buys during the early Thursday decline. Let’s see if they hold on Friday.

gmi: 5
gmi-2: 5
t2108: 64