process trumps results all the time

  • NASDAQ Composite’s closing day’s price is the most important price.
  • Market index itself will tell us the conditions of market.
  • Trend reversals or transition points is where maximum ROI is made.

I have heard that from FT 71 

Futures Trader 71 aka Morad Aksar. He is a well established day trader but i am not a day trader but i have learnt some tit bits from him.

Another important truism/maxim i have learnt in theory and practice is this : Preserve your capital at all costs. In theory i have learned it at Options Express 2 day courses with George Fontanills. Practically after losing much of my profits i learnt to add this : Preserve your profits at all costs too!

why? When we transition – right at transition times is when we hit Gold mine.

Let me explain : Now you see the NASDAQ daily chart. On December 24th 2019 we hit 6190 and 50 days Simple Moving average was 7164.  The difference of around 1000 points.

Since we know at this blog that the price is the only true North Star and we would have been in short position for this long. We expect the price to continue trending down till it does not.

Now next day we have December 26th, and we also know that the closing price is very very important and significant. All the billions and billions of dollars and savvy money managers and hedge fund gurus and Mutual funds all fight it out and finally come to the days end and a closing price. The most significant price for the day. December 26th it closed up around 361 points.

Has the trend reversed? We don’t know, but the wonderful big green candle catches our attentions since we are attended the heart beat of the market which is nothing but the index like NASDAQ Composite.

that is the first day of attempted rally. why ? the closing price was higher than the previous days closing price and by a whopper!

we wait and see and by Jan 4th after 7 trading days it is alright up by around 525 points from the low of the first day of attempted rally. It was day 7th follow through day of the attempted rally

System developed by William J. O’Neil to identify an important change in general market direction from a definite downtrend to a new uptrend.

A follow-through day occurs during a market correction when a major index closes significantly higher than the previous day, and in greater volume. It happens Day 4 or later of an attempted rally. Leading up to a follow-through day, an attempted rally takes place during a downtrend when a major index closes with a gain. The rally attempt continues intact as long as the index doesn’t make a new low.

Follow-through day variables include: an index closing sufficiently above 1% on increased volume, positive behavior of leading stocks, and improved market action regarding support vs. resistance levels. The most powerful follow-through days often happen Day 4 through Day 7 of an attempted rally.

In the wake of a follow-through day, the market should continue to add gains in strong volume, with breakouts by top stocks. This is further confirmation a new uptrend is underway.

Now we enter the market always always with a stop and right now the market is up 750 points from the entry.

happy trading!

 

 

 

qld – double nasdaq 100

The Nasdaq-100 Index includes 100 of the largest domestic and international non-financial companies listed on The Nasdaq Stock Market based on market capitalization. The Index reflects companies across major industry groups including computer hardware and software, telecommunications, retail/wholesale trade and biotechnology. It does not contain securities of financial companies including investment companies.

Now QLD is proshares ETF. This leveraged ProShares ETF seeks a return that is 2x the return of its underlying benchmark (target) for a single day, as measured from one NAV calculation to the next.

Now compounding is amazing concept in a up trending market!cdd8afea0d4bfb10c19630c80e8d842b

in the chart below the red line is QLD ..In 5 years its up 216 % compared to less than 92 % growth for NASDAQ -100 !

 

Screen Shot 2019-02-06 at 5.41.13 PM

Happy trading !

 

 

 

 

 

the beast has woken up

screen shot 2019-01-28 at 12.33.50 pm

It will not escape your attention ladies and gentlemen that for the last 8 trading days in NASDAQ since Jan 15th, it has closed above its 50 day SMA.

on 1/22 there was a drop and high to low difference of 130 points but still it bounced neatly above 50 day SMA and closed above the century figure of 7000, a good 20 points above it.

similarly on 1/23 a nice push up/buying pressure from low to close of 75 points, a good bounce above 50 days SMA can most importantly a close of 7025.5 points above the previous day’s close.

Closing price is critical and a close above 50 days SMA, a good bounce above it; and then above the century figure of 7025 and then above the previous day’s close…these all scream about one thing. The market is refusing to let go it’s gains. this is so unlike the previous 3 attempts to rally.

its good to see another good gains on 1/24 and 1/25.

IBD has this point “The interesting part is that the leadership is shared and broad, so far. Nine sectors are up about 7% this year, including electronics, energy, banks, software, finance, transportation, chips, S&Ls and retail.

Admittedly this is early to be identifying leaders. But if the trend holds and grows, the stock market could be looking at a rally with many players. What bull wouldn’t like that?”

For me i like this and am already long on QLD.

 

market is still not out of woods

last week, the day after Christmas we have had the best one day show in about 10 years in the market. But it was not convincing, why? because there was so small rise in the number os stocks going above the 50 days SMA in S&P 500. On the big day it went up by 3.39 which is insignificant compared to the drops (look at the big red candle o Dec 4th – one day drop of 23%!!)

Screen Shot 2018-12-29 at 12.49.46 PMScreen Shot 2018-12-29 at 12.53.15 PM

also checking QLD – we see that on the same close at 12/20 the OBV was 56 million and on 12/26 the OBV was 53 million. this is divergence and hence the market is going to go down further.

on the COMP 6630 is the next resistance (weekly low on the week of Feb 5th 2018)

One positive thing is the DMSI – quoting them “The Delta Market Sentiment Indicator (MSI) declined to 7.5% this week.  The range on the Delta MSI is from 0% to 100%.  A 7.5% reading is very low and a sub-10% reading has only occurred during four periods (including this week) in the past 15 years (a longer history is shown this week instead of the usual 12 month review).  Historically, the stock market has shown strong performance over the next twelve months post a sub-10% reading.”

2 dangerous sell signals in the market

Screen Shot 2018-12-12 at 11.20.03 AM

look at the above chart of QLD – nasdaq 100 Double . both the 55 days SMA just crossed the 208 days SMA from above and also the 10 days EMA crossed the 22 Days SMA from above (rather bounce).

My expectations is that market is going to fall further.

NASDAQ is just above the critical 7000 level we have had triple top

NQ has a a shorting opportunity at 6800 level

 

yield curve inverted market crash

i am not a predictor of the market, neither do i have any crystal ball. but the last post accuracy has been immediately proved in the market on Tuesday December 4th 2018. wow, what  fall!

IBD narrates – “At one point in the session, a 2.78% yield on the five-year note dropped under a 2.80% yield on the shorter two-year note. In other words, it made less sense for investors to hold the longer-dated bond for a specific return.”

usually the 10  year is compared with 2 year curve. But this is telling. Market need something to sell.

IBD continues – This was supposed to be a banner week for the Dow Jones industrial average and the broader stock market. President Donald Trump called off his escalation of China tariffs days after Fed Chairman Jerome Powell traded his hawkish talons for a Santa rally cap. But financial markets just aren’t buying the good cheer.

so i will either short or stay out of the market

preserve our capital and profits at all cost! Market is in correction.

then they my be a possibly to play an other day

market is in rally

A follow through day is a gain in major indexes for 1.25 % or more in high volume. The market did just that today.Â

IBD says this

The midterm election results and a 2.6% gain for the Nasdaq composite delivered a nice present for stock market bulls Wednesday. The Nasdaq 100 did even better, up 3.1%, helped by strong moves from FANG stocksAmazon.com(AMZN), up nearly 7%, and Netflix(NFLX), up 5%.

The Nasdaq composite followed through on the seventh day of its rally attempt as several top-rated growth stocks made explosive moves in the stock market today. The S&P 500 also followed through with conviction, and the Dow Jones industrial average surged also, both with gains of 2.1%.

lets look at if other stocks in S&P 500 are participating in the action yesterday .

Look at the chart below – 13 % increase in the number of S&P 500 stocks above their 50 days SMA!!

Screen Shot 2018-11-08 at 8.34.10 AM

i have gotten into the market from all cash position yesterday.

Red flag Research shows that a distribution day in any of the first three sessions after a follow-through day can foretell a failed rally. A distribution day that comes later is easier for a rally to overcome. THE RISK DROPS OFF SHARPLY from the 6th day or so

Red flag 2 : top rated stocks action :: in early stages of new uptrend strong action of leading stocks is CRUCIAL. Top rated stocks should be breaking out of bases in big volume.

A confirmed uptrend can weather an occasional sell-off every week or two and still show the fight to keep rising.

THERE WERE 7 distribution days many times in 2017 yet it rose 37% !!

I have gotten in the market yesterday. Good deepavali gift!!

happy trading