Heikin- Ashi Candles – what are they saying about the market?

Heikin- Ashi Candles (H-A Candles) smooth out the rough edges and indicate if the patterns are continuing or they are just about to transition.

They are like regular candles but use averages. Something akin to the functioning of moving averages. I feel they are simple and effective. Why?

Let’s look at closing price on a H-A candle. It is average of high, low, open, close of the current time period. Isn’t that awesome! Why? because no matter what people say what they think, what the TV pundits think and say. No matter what – ALL INFORMATION IS IN THE PRICE. More so in the current world we live in – every information moves at speeds that was too much to even imagine for say Jesse Livermore – often quoted as the greatest speculator of all time.

Look what he says on page 11 of his own book under a pseudonym??

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So let’s smooth all all fluctuations and say what is the average closing price for today. How is it doing with respect with last few days.

let’s look at S&P 500 Stocks Above 50-Day Average ($S5FI). From 90 % of S&P 500 stocks above their 50 days moving averages it has fallen down to 60%. Basically the stocks are losing steam and falling off. This is invaluable information. Why? the best biggest companies are not being supported by biggest institutional monies and hedge funds and Pension funds like The California Public Employees’ Retirement System (CalPERS) which has 300 plus billions in assets. Individual traders and speculators like you and me cannot match their dollars. We do not move the markets. We just follow the price.

As Jesse said – the tape does not concern itself with why and wherefore!

So last 3 weeks the stocks composing S&P 500 are falling off. So we do not enter into newer positions and take our profits. That is what i did in TQQQ and NQ yesterday. I closed all my positions and am sitting in cash now.

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Now let us look at TQQQ – the triple NASDAQ 100. It went up 94.6 % since the start of the rally low on December 26th 2018 till close of the market price of Thursday March 21st. it gave up 14 % last two days. So we exited to preserve our profits. (all regular candle prices not smoothened H-A candle)

Now why is this last two days different from say March 7th and 8th 2019  when they were similar declines?Screen Shot 2019-03-26 at 12.04.21 PM

March 7th and 8th – the price decline was 5.3 % or 2.77 dollars. on 6th the volume is well below the 50 days SMA of the volume and on 7th the decline in price was accompanied with just about average volume. IBD still had market in confirmed uptrend.

From 8th to 21st of march the market was going up BUT S&P 500 Stocks Above 50-Day Average ($S5FI) BARELY BUDGED it held at 71 %!! TQQQ went up by 20 % but the best stocks did not move up!

On 21st March at the climatic top the volume was just above average in TQQQ – around 19 million. the 50 days Average volume was 17.8 million.

the 7.1 % decline in the last 2 days. were in volume of 33 and 26 millions! which is to say 83% more volume than average on Friday 22nd March 2019 and then 30 % more yesterday. IBD changed its market outlook on Friday to market under pressure.

Number 1 : price in the only true north star

Number 2 : Preserve your capital at all costs

Number 3 : Preserve your profits.

Market climbs the wall of worry going up in an escalator or slowing trudging up. It falls down like a rock or a free fall elevator.

lets look at the 5 min intraday chart.

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7600 price seems to be a support. lets just wait and see.

Finally lets look at 5 days 60 Min H-A Candle chart of TQQQ.

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look at the bottom pane the big green volume candle bar and the values for that particular hour. Volume was 300 % more from 2-3 pm the day of Wednesday March 20th 2019 price change was 56 to 59.66 – 6.5 % But then look at all the high volume red candles  that followed the price decline.

So i am staying out of the market for now. Right from 3/22 and 3/25 10:00 am high volume price declines. So i get out of the way.

Happy patience and staying put for now!

 

Transition time????

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last 2 -3 days were very interesting. Yesterday S&P 500 dropped by 0.3 % but the number of S&P 500 stocks above their 50 days Simple Moving average (SMA). Last 5 trading days it dropped by around 9 points. Nothing serious but makes me cautious.

Russell 2000 closed below its 10 days SMA. It’s finding a touch resistance at 200 days SMA.

Let’s look at Heikin-Ashi chart for S&P 500 Stocks Above 50-Day Average ($S5FI)

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not good look – the number of stocks in S&P 500 are losing momentum and are falling below their 50 days SMA. about 21 percentage points from march 1st 2019.

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It’s in an amazing trend – not only there has been higher volume price increase in QQQ yesterday but volume increase was 50 percent above average!

lets look at 5 mins chart for NASDAQ composite

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just up and down and lots of volatility but the most important point is that the closing price of the day. Which is the most important price – its been going up since Friday of March 8th 2019 except for one day on 3/14/2019, which is last Thursday.

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for the 3rd day in a row TQQQ closed above the 200 days SMA!Screen Shot 2019-03-21 at 9.29.20 AM

The only thing little bothersome is Russell 2000 has been falling in the last chart which is the ETF with volume

all the FAANG stocks are up – wonderfully yesterday. Netflix was a bumper. It went up 4.5%, up 16 + dollars !!!Screen Shot 2019-03-21 at 11.43.17 AM

So what is the conclusion? Price is the only true north star and it is up so I am long NQM19 and TQQQ.

Happy trading!!

 

 

TQQQ 71.9% Growth since Market bottom of 24th December 2018

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TQQQ just crossed its 200 days Simple Moving Average on Tuesday’s trade. It crossed it in Higher Volume of 20 million. It’s average 50 days Volume is 18 million.

ProShares UltraPro QQQ seeks daily investment results, before fees and expenses, that correspond to three times (3x) the daily performance of the Nasdaq-100 Index.

From the above picture it gained around 72 % in the last 3 months or so

Below is QQQ reflecting 1:1 for NASDAQ 100. look at the On Balance Volume. It is fantastic with no divergence.

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IBD says this “The overall action points to a generally healthy climate for stock pickers.

In IBD Leaderboard on Tuesday, as many as seven companies rallied 0.5% or higher, easily outrunning the major indexes. They include Zscaler (ZS), which has thrust more than 40% past a prime buy point of 48.34. Diabetes play Dexcom (DXCM), Euronet Worldwide (EEFT) and Chipotle Mexican Grill (CMG) also rose nicely.”

One cloud in the silver lining – It continues “The Nasdaq composite wasted an early advance of nearly 0.7% to finish with a 0.1% gain. It closed well within the lower half of Tuesday’s intraday range. Volume rose vs. the prior session. The price-and-volume action pointed to stalling, a form of distribution in which large fund managers sell heavily into market strength.

The stalling day raised the Nasdaq’s distribution count back to five over the past 25 trading sessions. On March 13, the Nasdaq shaved off a Feb. 7 distribution day to its recent strong advance.

Four other instances of unusually strong profit-taking have taken place a lot more recently: Feb. 28 (down 0.3%), March 4 (-0.2%), March 6 (-0.9%) and March 7 (-1.1%).”

It has been 7 days of fantastic run after the bad week of Monday March 4th – Friday March 8th

Currently I’m Long on NQ and TQQQ

 

weekly stock market review as of Week ending Friday March 15th 2019

barchart sectors 5 days performance as of Closing Friday March 15th 2019Screen Shot 2019-03-18 at 12.54.55 PMfidelity end of 5 days as of Friday March 15th 2019

the top 5 sectors closed at the week’s highs. IWM – Russell 2000 ETF after last weeks red candle and down week has been picking up and again this week might test the 50 days Simple moving average (SMA).

according to IBD “The Nasdaq sprinted 0.8%, leading the market largely on strength in semiconductor stocks. The S&P 500 and Dow Jones Industrial Average each added 0.5%. The small-cap Russell 2000 rose nearly 0.3%. Volume rose sharply due to the simultaneous expiration of options and futures.”

IBD continues “During the week, leadership was broadly based. A dozen and a half groups scored weekly gains of 5% or better, according to preliminary data. They included medical stocks, retail, tobacco, semiconductors, computers, oil and transportation ships.

Note the variety: This is not a narrowly based uptrend, and that’s good news. Bulls prefer diversified leadership because it protects the indexes against one-off outcomes.

The S&P 500 index and Nasdaq composite recouped the prior week’s losses and hit their best levels of the current stock market rally, climbing 2.9% and 3.8%, respectively, for the week.”

Overall the market is in good health. Small caps are rising, and most importantly growth stocks are behaving extremely well.

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happy trading!!

 

Good days ahead?

 

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the above is a chart which indicates a 13 + % jump in the number of all stocks trading above their 50 days Simple moving average. This jump occurred yesterday’s trading which was calm and non directional.

this is the best 1 day jump since the start of this current bull market on December 26th 2018.

this may be foreboding a good week next week.

Happy trading !

Market overview for Tuesday March 12th 2019

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QQQ the cubes representing NASDAQ 100

this month is the 20th anniversary of Invesco QQQ, its top-performing large-cap growth ETF that tracks innovative companies included in the Nasdaq-100 Index. Launched on March 10, 1999, QQQ offers investors access to global growth companies, excluding the securities of financial companies.

QQQ is the sixth largest ETF listed in the US with $66 billion in assets under management and one of the longest performance histories available in an ETF.

It is amazing for the individual investors. it went up 500% last 10 years. It closed at 30 in March 2009 and this march of 2019 it is at 176.

Mining Gold silver and gems industry group is the top performer on Tuesday. The best YTD is energy solar companies, with 39% gain so far.

SOXX ETF and IGV Software ETF has lots of influence on performance of NASDAQ – 100.

IGV is up 23.4 % this rally starting December 26th last year. IGV is up 29.6 %. NDX – nasdaq 100 is up 19%.

NASDAQ composite’s volume was below average yesterday with 2.1 billion shares traded.   it went up around 0.44%. The best part is that it surpassed the closing price of Monday March 4th 2019 which resulted in a 5 day pullback.

IBD says this – “The tech-fortified Nasdaq composite gained 0.4% on Tuesday. It continued to gnaw away at the constructive pullback of 4.1% seen over a five-session selling streak that ended Friday. At 7591, the leading index for growth stocks is still enjoying one of its strongest advances in any quarter in recent history, up 14.4% since Jan. 1”

Yesterday’s low of NASDAQ did not touch any of the previous day’s price which is fantastically bullish.

the small caps ISHARES Russell 2000 ETF IWM did not show any direction yesterday and was very tepid

 

 

 

market last week ending Friday 8th 2019

last week NASDAQ composite fell approximately 300 points. Yesterday it rallied nicely beyond 61.8 % fib retracement.

Screen Shot 2019-03-12 at 12.34.31 PM

next the daily chart of NASDAQ composite Heikin – Ashi chart (to remove noise)

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the 200 day Simple moving average was recovered and most importantly the 7500 level was retaken

the below chart is the 5 min chart for yesterday.what a trend!!

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the last chart is QQQ ETF and before that IWM ETF (russell 2000). Good solid candles but not good volume

Overall the last week action was decisively defeated in one day trading yesterday

IBD says this Volume in Boeing was more than eight times its average, and it single-handedly accounted for an increase in NYSE volume. Nasdaq volume fell. Advancing stocks led decliners by a 10-3 ratio on the Nasdaq and by nearly 4-to-1 on the NYSE.”

The IBD 50 rose 2.2%, with several stocks rising from pullbacks to their 10-week moving averages.”

IBD continues, “On Monday, the Nasdaq composite rose 2% and the S&P 500 index advanced 1.5%, both reclaiming their 200-day moving averages. The Dow Jones rallied 0.7% even with Boeing (BA) falling 5%, though that was well off its 13.5% intraday loss.”

“Even better, growth stocks were big winners, with software stocks among the champions. Software is rated No. 1 out of 33 sectors tracked by IBD, rising 22.4% so far this year alone.

Among best ETFs, the iShares Expanded Tech-Software Sector ETF (IGV) on Monday rallied 1.9% to 205.55, reclaiming its 10-day and 21-day moving averages.”

Over all it is good start for the week

Happy trading