what a bang to start the 2nd Quarter in the market!

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IBD 50 index  is an index of 50 top performing growth stocks in the world with high spectacular momentum and top line (top 1%) of fundamentals.

As the market is picking up steam growth stocks lead it – and IBD 50 Index has been picking up. it just cleared its 200 days SMA and has been going up steadily last 3 days.

One positive yesterday is the OBV for TQQQ

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Look at the chart below

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the OBV is approaching very close to the the march 2019 high – and this is just 1st day of trading for 2nd quarter of 2019 !

I am long on NQ and TQQQ!

happy trading !

happy traveling also !

 

the stalling action in markets

If we look at the below chart we see the problem in the 2 and 1/2 month rally started in the first half hour on Friday March 22nd 2019., You see with

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the volume for 9:30 am half hour was about 3 times the average 50 Half hours volume.

TQQQ went down by -2.1 % compared to the previous days close !! that is – $ 1.25. i would have saved considerably money if i exited then. But alas, I did not.

Moreover look at the average trading range for 50 half hour periods. It is around 0.61. it lost double that during first half hour! Next on 3/25 Monday the volume grew even more to 5+ million and the price drop was close to 1 dollar!

Now look at the daily chart for TQQQ

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3 fantastic high volume declines in last 4 sessions!!

IBD says this “The market outlook was lowered a notch to uptrend under pressure last Friday, when the Nasdaq composite plunged 2.5% in higher volume. With the market uptrend under pressure, it’s perfectly fine to take some profits in some top performers, especially if a stock has rallied 20% or more after a breakout from a base.”

high volume selling or severe stalling is 6 on NASDAQ and 7 on S&P 500 in the last 25 sessions.

Happy waiting !!

 

 

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!!

 

 

why cutting losses quickly is good

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Delta news letter has some comedy with insight i love.

“Investors just experienced what it is like to be down 20% and then right back up 20%.  It equals a 4% loss.

This is explained by how percentages work.  Percentage down is calculated from a large number (SPX 2,940.91).  Percentage up is calculated from a smaller base (SPX 2,346.58) which means a smaller absolute rise in the market still equals 20%.  For investors to recover all of the losses from the high, their portfolio would have to appreciate by 25% from the low.

The percentage math gets worse as the loss grows.  For example, if a portfolio starts with $100 and loses $50, it is down 50%.  For the portfolio to return to its original $100 amount, it would have to appreciate by 100%.

Percentage math helps explain why losses are so painful and why avoiding major loss should be a top priority in an investment portfolio.  Delta specializes in risk mitigation to avoid major loss.”

The BEAST has acted (and thus speaks)

  • NASDAQ about to breakout.
  • Conservative estimates 100-200 points imminent in the next few days.
  • UBNT Ubiquiti Networks. TWLO Twilio. TTD The Trade Desk. PAYC Paycom Software, Inc.  Leading growth stocks.

When a Godzilla or KingKong is moving and running, it is common sense not to second guess what you see.

There is a trading maxim i learnt a few years ago – trade what you see and not what you think. at present it looks like its going to take off! 2 days the KingKong the beast called NASDAQ closed above its 200 days Simple Moving average

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you see in the following charts – the first chart is OBV – On balance volume of QLD – DOUBLE NASDAQ 100 ..when on 10/04/2019 it was 53 million shares. Just yesterday we are 12 points below the close on 10/04 and we hit 53 million shares. Accumulation.

Secondly, look at the second chart of NQH19 futures contract. Incredible ascending triangle! Breakout imminent on NASDAQ.

other signs – Both S&P and DOW Jones have easily surpassed the 200 day SMA recently which just acted like token resistances (according to IBD)

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What to make of the market?

This site’s philosophy is very simple. I feel (I hope I’m humbled by this ..or rather i hope I’m humbly starting this): This site’s philosophy is sublimely simple : Price is the only true north star. I want to simply mimic the price. Price is rising and i am buying. Price is falling and i am selling.

what i mean by that is this ?

Let me put it in a different way. Say you are conservative. Beta is a measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole.

QQQ or the cubes which track the NASDAQ – 100 has a beta of 1.10 ..roughly it mirror the NASDAQ – 100. AMZN , Amazon has a beta of 1.71.Netflix NFLX 1.53.

there are ETFs dedicated to High Beta or it’s implications – momentum stocks!

Now QLD , which daily doubles the NASDAQ – 100 has a beta of 2.25 !!

Say Jan 4th 2019 when the market started its rally you bought 100 shares of QLD for 68 dollars.  On Feb  6th 2019 it hit a resistance at 200 day SMA and then next day you sell at market open (it confirmed because there was a gap down). You sold at 79.

So you went in with 6800 dollars and now you have 7900 dollars.

Now if you look at market and it is dropping on high volume end of the day prices you know the market is in downswing. Say it drops down to 70 USD, and you get in based on simple end of day price action. Now you have 112.8 shares!!

See you accumulated assets slowly! In QLD or for that matter NFLX or AMZN wealth is accumulated by accumulating shares by being in cash when the market is falling!! and getting in when the simple price volume actions says the trend is reversing from going down to going up.

Buy at the top sell at the bottom.

Profit in assets are only made at the price you buy not at the price you sell. So you go long (buy) at the beginning or there about of an uptrend or go short (sell) at beginning or thereabouts of a downtrend. Since price is the only true North Star. One ‘exits’ at the top or bottom to make true profit and to accumulate assets. In both cases – long or short – you are buying low and selling high. THIS DOES NOT MEAN YOU ARE ACCUMULATING ASSETS AS PRICE IS FALLING. In fact it is exactly opposite to it. Accumulating assets as prices are falling is buying high and selling low ( you sell low because you can’t bear the pain of loss). You always accumulate assets when price is rising.  You exit assets when it’s price is falling.

Happy trading folks!

 

 

the beast has woken up

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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.