2023-09-15F Uptrend Day 13 Uptrend under PRESSURE Holding TQQQ Sorry for the mixup on not getting weekend mewsletter sent!
FRIDAY, THIS WEEK, and YEAR-TO-DATE:
The major indexes all dropped below their 50-day moving average lines on Friday with higher volume from triple-witching options expirations. The drops in price paired with the higher volume, created distribution days for the indexes.
The market remains up for this year but is showing significant uncertainty with the major indexes (Nasdaq, S&P500 and Dow Jones) all dropping below their moving average lines on Friday.
The market bobbed up and down this week. The Nasdaq ended with a significant drop on Friday with huge volume related to a wide number of options expirations were executed when they ended “in the money.”
I hope you have invested in the TQQQ (triple QQQ Exchange Traded Fund) to earn those higher returns. If not, you may want to wait to see what the market will do next.
What could have caused the 75.6% volume rise for the Nasdaq and 90.0% volume rise for the S&P500? The market hit a triple-witching options expiration day which almost always generates a hug volume. Lots of options ended the week “in the money” and were executed on Friday. The volume, simply,was artificially high!
>>>> Keep the shorting idea in your pocket. WE MAY WANT IT NEXT WEEK!
And note that the Nasdaq has been dancing on its 50-day(red) line. For me to short the QQQ (Nasdaq100), I would have to see the QQQ stay below its 50-day line with strong volume, showing serious distribution (selling.)
Yes, Friday did meet that criteria – but you have to ask what caused the HUGE rise in volume. And the answer is simple – The market!
As long as I see a major index staying close to its 50-dayline, and that line is rising (as it is now), I will consider staying in that index’s ETF such as the QQQ for the Nasdaq.
QUICK REVIEW OF THE Nasdaq’s RECENT HISTORY
Let’s start our market analysis by stepping back to see what the Nasdaq has been doing over the last 6 years. What do you see in this weekly Nasdaq chart?
Why did I draw in the first rising turquoise line?
And what does the second (more recent) turquoise line mean? Let’s take a look.
Did you follow the stock market this year? I saw an amazing rise, steeper than the 4 ½ year riseon the start of this chart! Here is what happened between 2017 and 2021
· The stock market dipped at the end of 2018 and
· Had a 50% rebound in the beginning of 2019
· Then the market wandered sideways through the rest of year until it had a nice rise during the 4th quarter.
· We all recognize the January-February pandemic dip in 2019 followed by the springboard rise as many new investors put their severance packages and retirement accounts to work in the market.
Even though the Nasdaq is off its July 2023 high, its 34% rise is an impressive result.
But what has it given us lately?
The first 6 months of 2023 were a bit of a roller coaster – some serious dips and a flat period at the end of the second quarter.
But if you followed the instructions in most roller coasters and hung on, the market gave us an extraordinary 31.5% gain for the Nasdaq so far this year. (Friday chart below)
The Nasdaq added one more day, a 3% drop, ending September15 at +31.0%
But fortunately, you cannot buy the whole Nasdaq (there is no fund with its 4000 stocks in it.)
Fortunately??? Yes! You can buy the QQQ fund, 100 largest stocks on the Nasdaq as a single fund (excluding some slower, financial stocks). The QQQ has, historically outperformed the Nasdaq! And it has outperformed the Nasdaq again in 2023. Above you saw the Nasdaq has risen a juicy 34% this year.
But the QQQ fund has outperformed the Nasdaq, growing 42.8% so far this year!
But WAIT! Here is something much better you can use when the Nasdaq is traveling in a clear Uptrend. The Triple QQQ (TQQQ). Note the chart look similar. The Triple earns close to a 3x return compared to the sing QQQ.
Which would you prefer:
· The QQQ’s 42.8% return so far in 2023….or
· The TQQQ’s amazing return shown below….. of 129% as shown on the TQQQ chart below.
And we still have 3 ½ months to go in 2023. Please keep in touch with this newsletter. Since theNasdaq has given back 4.7% off that July high, I am watching the recent priceaction to see if the TQQQ will give back something close to 3 times that much.
>>> I am great at reading the strength of the market as it happens, but I cannot predict its end of year closing price. Hang out with me to get the daily“blow-by-blow” account.
Note: If the market starts to give up more of its 2023 gains, I could happily step out to cash and focus on planning a BIG year-end party! After this amazing year,I am not interested in risking more of the gains. I would rather just sit out the rest of theyear (a whole quarter is still ahead of us) then watch these amazing gains whither away. Cash can be a relaxing place to sit and watch the action.
Another question for those of you that like the S&P500….When you can invest in the faster Nasdaq, “Why would you want to invest in the historically slower S&P 500?”
And although the Nasdaq doesn’t outperform the S&P500 every day, it has over time, proven it significantly better returns.
The Major indexes wobble across the street with volume below the average for the last 7 days….until Wednesday when the Nasdaq’s volume rose to 1% above average..
And just to remind you, the Triple QQQ (TQQQ) has outperformed them all with a 134% gainthis year from the . But you must watch the TQQQ daily, because when the market drops, it will drop about 2 ½%.
Do you pay attention to price AND volume?
There were 4 distribution days (lower price with higher volume) in the last 20 days but only 2 accumulation days (higher price and higher volume.).
Yesterday’s minor accumulation day give us the second Accumulation day in the last 4 weeks.
PLEASE WATCH THIS NEWSLETTER EVERY DAY. This market could crash on little notice. Or take off to new highs!
ON THE ACCUMULATION/DISTRIBUTION RATINGS TABLE BELOW……
THE DOWNTURN OF THE ACCUMULATION RATINGS is a slight WARNING! Don’t worry – I will watch it for us and report back any “breaking news!”
Here is a confirmation of the current weakness in this Uptrend. The A & B rated stocks which had been climbing higher has dropped a frustrating 8% in one week from 46% to 38%.
I AM CONSIDERING SELLING MY TQQQ. This market is not showing the strength I need to be comfortable holding indexes that are mostly going sideways, then sliping lower.
IF YOU PURCHASE AN AGGRESSIVE POSITION LIKE THE TQQQ, YOU MUST KEEP YOUR EYE ON THE MARKET EVERY DAY. Even if it is just a quick read of the front of the ARMCHAIR INVESTOR newsletter.
One additional “Word to the Wise”…
>>>>>--- MOST MARKETS FALL FASTER THAN THEY RISE! So please, read this newsletter (at least the first section) DAILY!
Please send questions, comments, suggestions ideas and requests to: My text message account at (214) 995-6702.