2024-04-23T Armchair Investor Newsletter. Rising Market Takes Control

2024-04-23T Armchair Investor Newsletter. Rising Market Takes Control

The Market was falling HARD with a significant drop in theNasdaq. But Monday gained 0.9%, and Tuesday gained another 1.6%! And I declared a new Uptrend.  Was I too aggressive?  We may find out Wednesday.

‍Last week’s reversal actually started on Friday a week ago with a 4.8% drop with the TQQQ. Over the next 4 days, the TQQQ dropped each day(with only 1 insignificant rise) for a total horrendous loss of 15.7%.  I hope you chose a time to go to cash early in the week.

By Tuesday, the market showed a more aggressive side with an amazing 2.9% rise in theTQQQ. Wow!  

But look at the current table of the THREE MAJOR MARKETS. That is very nice rises in both the Nasdaq and the S&P500. (As usual, the DJIA just limped along.)

Look below at how well the three QQQ ETFs are staying in order! The day’s rises were exactly in the 1, 2, 3 proportions.

We have lost about one third of the rise from the October 2023low. If you have gone short…. (in the SQQQ perhaps) you will see your portfolio rise as the indexes fall.  (Good job!)

The market has RISEN for the last 2 days. If you are short the TQQQ, you might consider shifting to being long after the 2.9% rise on Monday and the 4.4% rise on Tuesday (today).

‍Note the horizontal line I have added across the 50 price line. In December it was a point of resistance and last Friday, that same 50 was a point of support!  But will the rising TQQQ continue higher?

If the TQQQ reverses down and undercuts the 50 price with higher volume, I will probably exit the TQQQ and wait until it settles on a direction.

If you have gone short…. (in the SQQQ perhaps), you will see your portfolio rise as the indexes fall. (Good job!)  But now it looks like the market has fallen as much as it is going to at the moment.

Do the 2 rising days in a row, confirm a new Uptrend?  Two days in one direction is NOT enough for me to declare a new Uptrend.  

BUT…. stay tuned!

PAPER TRADING:  If you aren’t comfortable getting in the inverse QQQ (or triple inverse QQQ called the SQQQ), consider holding a small position ON PAPER  (which means you don’t buy any of the stock, but you track it on paper as if you had… to see how great the market treats you!)

For your information: The TRIPLE SHORT QQQ  is the SQQQ.

If you missed my note and chart about the SQQQ (the triple short QQQ), just think “inverse.”  

·      When the QQQ falls,

·      The short QQQ (the SQQQ) rises.

·      The Triple QQQ (TQQQ) risesabout 3 times as much. Wow!

It may seem strange, but the charts will look very similar….Until you do the math and see the 3x factor in the pricing.

What can we do when the TQQQ is falling? (See chart below) Just sell the TQQQ (or any other QQQ you own), and buy the inverse – the SQQQ.

Below is the Short QQQ (SQQQ).  Note the SQQQ fell for almost 5 months as theTQQQ rose.

In the above chart, you can see the nice price rise of the TQQQ for the last 2 days in a row? (But they had low volume supporting the rise.)

BOTTOM LINE: A triple of any stock that is winning is better than just holding the single stock.

The IMPORTANT QUESTION YOU HAVE TO ASK YOURSELF:

Has the market rolled over (which I believe it has) and started to drop (which it has)? YES  

 Then shouldn’t I be in the inverse (short) ETF? ….. YES!

>>>>> The market was falling for about 4 weeks. But is now rising. The market rose significantly on Monday and Tuesday!

I LOVE THE WAY MY 20-DAY TABLES (below) make the market reversal soooo clear. I want to see at least one or two more strong,rising days to declare the market is back in UPTREND!

NOTE: *  The GREEN date box in the date column above means the Nasdaq hit an all-time high closing price! Wow!

The most recent two rising days (Monday and Tuesday) set the market up for a new Uptrend.  I may be jumping in a little early to declare a new Uptrend has begun. But my intuition tells me the market has shifted.  We’ll see if the Uptrend gets support on Wednesday.

>>> MY CURRENT ACTION PLAN:  BE LONG IN THE Nasdaq (the QQQ.).

And be LONG in the S&P500 if you play the S&P500.

I have not earned as much playing the S&P500 so I stay with 100% of my investments in the QQQ or TQQQ.

The Accumulation/Distribution table for the current marketis shown below.

The strongest (green) “B” boxes are holding at 43% .

Overall, the sum of As + Bs is a STRONG  56% today (bottom right-most percent) only 3% belowthe highest rating in the last 5 weeks.

(The above comment is my way of explaining to YOU that the market is looking UP! And you should consider some what higher moves. )  Look at the sum of the As and Bs that shifted from 44% As + Bs to today’s 56% As and Bs.                                                            

The only way we will know which way the market is moving is to watch the market….. each day. On Tuesday, the percent of As and Bs rose a slight 2%. On Wednesday, the percent of As and Bs rose 2% more.

Pink boxes above indicate ratings that have fallen over the prior week. Green boxes above indicate ratings that have risen over the prior  week.

Please consider reviewing this newsletter daily:  The markets can change direction and strength quickly!

Note that the percentage of As and Bs is holding between 58 and 62 for the last 5 weeks!

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NOTE THIS WARNING.  Holding onto a falling stock, (whether an ETFor the stock of a favorite company), is a quick way to lose your recent gains.If you play individual stocks and ETF’s, play carefully. Use the real returns(daily, weekly, monthly)

IT IS COMMON FOR STOCKS, ETFs, ANDFUNDS TO FALL FASTER THAN THE RISE.

Of course, I do not sell a positionthat has been rising well after one or two small down days. But if you had asignificant loss over several days, especially if there is an increase inmarket distribution days (down days on higher volume), then stepping outand waiting in cash can help you save your portfolio for future rallies and letyou sleep at night.

REMEMBER:_____EVEN IF CASH IS A VALIDPOSITION,…in a fast rising market, you should VISIT your portfolio to verify it(or a big part of it) is not dropping.

>>>> Stay tuned for Friday’sresults!

One additional “Word to the Wise”…

>>>MOST MARKETS FALLFASTER THAN THEY RISE. Beware of buying any new positions unlessthey are very healthy.

Wishing you best returns in your portfolio!.

Charlotte Hudgin,

The ArmchairInvestor newsletter

>>>>> I APPRECIATE YOURCONTRIBUTIONS FOR SUPPORTING THIS NEWSLETTER.  I USUALLY SPEND  MORETHAN 4 HOURS FOR EACH ARMCHAIR INVESTOR NEWSLETTER:

·      RESEARCHINGTHE IDEAS IN THIS NEWSLETTER,

·      CALCULATINGALL THE DATA I NEED,

·      WRITINGTHE TEXT FOR THE NEWSLETTER AND….

·      FORMATTINGTHE NEWSLETTER.  (Today it was more like 5 hours.)

I WELCOME YOUR COMMENTS ON THE MINORCHANGES IN TODAY’S NEWSLETTER (as described in the notes.) 

Thank you for your kind feedback and ESPECIALLYFOR YOU WHO HAVE DECIDED TO MAKE A MONTHY CONTRIBUTION.

Charlotte Hudgin, The ArmchairInvestor  

For active subscribers, my phonenumber is  (214)995-6702

May your stock portfolio grow and growand grow as this giraffe family has!

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