2024-03-08F: The Armchair Investor Newsletter. Nasdaq has Major Distribution day, drops 1.2%.

2024-03-08F: The Armchair Investor Newsletter. Nasdaq has Major Distribution day, drops 1.2%.

When an index drops 1% or more with higher volume, it shows some serious selling. This price-volume action is exactly what happened on Friday to the Nasdaq.

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The TQQQ (triple QQQ) has risen 247% in the last 19weeks!  (You are welcome!)  

Look at the daily TQQQ chart below.

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 >>>Friday’s high volume Distribution day suggests caution now.

I will be tempted to exit the TQQQ if it starts falling hard or has another significant down day – especially if that day also has high volume. Please watch this newsletter daily.  (Even if you just read the first page. I will put anything critical on the first page.) You have been warned!

If you step back and look at the above chart, you may notbe too concerned.  NOTE: It’s the high volume on Friday that has me concerned. Friday was not a pleasant day for the market.

If you are short of time, you can just read the first page. (I will put anything critical on the first page.) You have been warned!

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When you look at a triple Exchange Traded Fund that drops 1+% with higher volume, I see a Major Distribution (sell-off) day.

Let’s look more closely at the triple QQQs (all 3 forms of them shown below.) Note the2024 gains are still staying in an orderly 1 – 2 – 3 relationship year-to-date, but the doubles and triples are lagging. (Note continues below the QQQ table.)

Notice, on the Nasdaq chart below, the Nasdaq chart looks a lot like the TQQQ (the timeframe is a couple of months longer on the TQQQ chart.)

>>>That similarity shows you that the funds managing the QQQ, QLD and TQQQ are doing a great job – they are keeping their ETFs (Exchange Traded Funds) well inline with their intended 1x, 2x and 3x goals. Note the daily changes are 100% on the 1x, 2x, and 3x goals.

Overtime, they may get a little off those multiples.   

BUT INMY WORLD –

·       NOTHING BEATS THE TQQQ in an Uptrend, and

·       NOTHING BEATS THE SQQQ in a Downtrend.

NOTE:  For the next week, I have some big commitments in service projects (I am a Rotarian, the largest volunteer serviceorganization in the world!)

Thus,the newsletters may be shorter – especially if not much is shifting in themarket.  

You may be tempted to think I put in the following chart a second time today.  But no, this chart is the Nasdaq…. And, “yes!” It is created to be very close to the QLD and TQQQ in appearance.  

>>>You just make 3 times as much on the TQQQ as in the QQQ in a rising market. And you can't buy the whole Nasdaq in a single purchase. The Nasdaq is provided as reference of how the wider market is doing.

For Your reference, Here is the Nasdaq chart.

Let's look at the market history of the Nasdaq.

I like to look at the makeup of the Nasdaq and how it is moving in the market. The MARKET FACTORS, COUNTS & RATINGS TABLE below answers that question.

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If youcan’t sleep tonight because you know the TQQQ can drop 3 times as fast as theQQQ, I encourage you to take one of these moves:

·      First, look at a weekly chart (which takes out much of the annoying volatility),  

·      Second, realize that the TQQQ is climbing toward its recent high and is mostly rising (every investment has ups and downs.

·      Third, step back and see how they are adding up…. Are the investments rising or falling overall?

·      If you can’t sleep well at night knowing the TQQQ can fall 3 times as fast as the single QQQ, consider holding your investment in the QQQ and “paper trade” the TQQQ until you can trust its 3x performance.

·      And stay tuned…. Note what happens next so you will see ifthe exit was the best idea….. The good news about the TQQQ is that they have paid me well in every runup I have used them.

MY PLAN: >>> If the market keeps moving higher consistently,  I will simply put my money in the TRIPLE QQQ until the market starts to generate a smaller return or reverses down..

NOTE: for the last 23 years I’ve been following the QQQs, and then, when they came along, the TQQQ (triple QQQ) and the SQQQs (the short triple QQQ), my portfolio has enjoyed an accelerated growth.

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

MY PLAN:  It’s just 3 simple steps:

1.    Be in the TQQQ (triple long QQQ) when the market is rising.

2.    Be in the SQQQ (triple short QQQ) when the market is falling hard.

......The SQQQ rise if you hold it because the SQQQ is an INVERSE ETF. It rises when the market it represents falls.

3.    And sometimes wait in CASH if the market is changing direction or is just “flakey.”  I’ll discuss any of those times in this newsletter!

Isn’t it nice to have an investment that is likely to earn a positive return when the market is falling? (That is what an “inverse” ETF does like the SQQQ.)

>>>And if you ever get spooked, *CASH* is always a safe position.You may not make as much as being in a rising triple ETF but you will sleepbetter at night if you don’t extend past your comfort level. And a little practice will sure show you what you did right and what you did wrong, If you are willing to examine the big wins and losses.

Couldit be any easier?  I have played the triple QQQ (TQQQ) and inverse QQQ (SQQQ) for years.  They made sense then and they make more sense now.

So I continue my investing plan:

·       Hang on to the TQQQ when the market is rising.

·       Move to CASH when the market is unclear.

·       Change to SQQQ (the short Qs) when the market is falling.

I MUST complement the QQQ and SQQQ ETF managers! They deliver on their promise to ride the TQQQ up about 2.5X to 3X times the QQQ. In a

>>> I happilyput my investment in the TQQQ as long as the market is rising, being very pleased with whatever slight variation of 3x that they earn.

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>>>>>>>>MY PLAN FOR MONDAY:   Be in the TQQQ.  <<<<<<<<<<<<

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REMEMBER: I DO NOT KNOW HOW TO PICK THE TOP OR THE BOTTOM OF A RUN until I see them in the rearviewmirror.

But I usually get closer to the tops and bottoms than most traders.

>>>NOTE: The nice thing about the TQQQ is -- it can make a lot of money for you whenit is rising.  

THE BAD NEWS ABOUT THE TRIPLE QQQs – BOTH the TQQQ and the SQQQ: You can QUICKLY LOOSE THOSE GAINS IN A QUICK MARKET TURNAROUND IF YOU ARE NOT PAYING ATTENTION.  Please visit this newsletter every day – even if only to read the first page.

IF YOU ARE GOING TO PLAY IN THE TRIPLE ETF UNIVERSE, YOU HAVE TO WATCH IT EVERY DAY….. OR BE WILLING TO BE UNPLEASANTLY SURPRISED (DISAPPOINTED) WITH A QUICK SWITCH IN THE MARKET DIRECTION.

>>>> Really…. How long does it take to look at the current price chart? Just a wink if you have it set up on your phone or computer

I AM AMAZED AT HOW FEW DOWN DAYS  the Nasdaq has in the last 20 trading days!

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What I like best about the current MARKET FACTORS, COUNTS & RATINGS table below is the number of Accumulation days ( still (slightly) out runs the distribution days in the last 20 trading days.

That ratio gives me a good sense of the strength and direction of the current market. If the recent move of 6 UP days and 3 DOWN days confuses you, note that I do not count a day’s move unless it was at least 0.2% up or down (which these did.)

What should you do when the market starts falling (and it always will…. eventually.)?

Just read this newsletter that night and I will give you a simple solution based onwhat the market is doing then.

If you can’t stand the market dropping, it is OK to sell your holdings abd wait inCASH.

>>>>>REMEMBER: I do NOT know how to:

·      Get in at the bottom or

·      Get out at the top.

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But I have consistently gotten closer than most other advisors…. And that timing has returned significant growth in my portfolio and those report from elsewhere.

Areyou concerned that the market may have risen as much as it can for the moment? You might be right … but I’m not yet seeing the market slowing down.

>>>The current Uptrend is to still showing moderate strength.  

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NOTE: IF YOU EVER SEE AN EMAIL FROM ME IN THE MIDDLE OF THE DAY (which happens rarely), consider giving it a quick read. It MIGHT include a change of strategy you can implement during the day to reduce your losses as the marketfalls or to save more of your prior wins.

·      Remember: The market and individual stocks continue in the direction they are going…until they don’t.

>>>>Please read this newsletter nightly to be sure you don’t miss my notes on when and where the big growth (or fall) is happening!  

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What to do about the high volatility of the TQQQ?

>>>I suggest you read at least the first two pages of this newsletter each night. This action will keep you tapped into the current market. And remember:

·      I do NOT know how to get in at the market bottoms and out at the tops. ----- I just get closer than most others. Note on the above table the price/volume action

of the last 20 days. Only 3 days were Distribution days –when the price dropped andthe volume rose, indicated some serious selling.

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>>>>>FINALLY:REMEMBER:

In the stock market,…

“What goes UP, UP, UP….. eventually comes DOWN, DOWN, DOWN! “

Look below at the amazing percentage of stocks that have “A” or “B” ratings – Even after adrop from recent A+B s owning 68%.... today’s 55% As+Bs is still pleasantly strong.!!!

Accumulation/Distribution table:  

Pink boxes above indicate ratings that have fallen over the last week.

Green boxes above indicate ratings that have risenover the last week.

Please consider reviewing this newsletter daily: .Themarkets can change direction and strength quickly! Note that the percentage ofAs and Bs took hit over the last 4 weeks – a drop from 55% four weeks ago to  on this week!>>>>> !58% LAST WEEK on this week!>>>>> a small rise. Any rise increases my wealth!

NOTE THIS WARNING.  Holding onto a falling stock, (whether an ETF or the stock of a favorite company), can be 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) to guide your decisions.

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

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

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

>>>> Stay tuned for tomorrow's results!

##### One additional “Word to the Wise”…

>>>>>--- MOST MARKETS FALL FASTER THAN THEY RISE. Beware of buying any new positions unless they are very healthy.

Wishing you big returns in your portfolio!.

I APPRECIATE YOUR CONTRIBUTIONS FOR SUPPORTING THIS NEWSLETTER.  

I USUALLY SPEND  MORE THAN 4 HOURS FOR EACH ARMCHAIRINVESTOR NEWSLETTER:

·      RESEARCHING THE IDEAS IN THIS NEWSLETTER,

·      CALCULATING ALL THE DATA I NEED,

·      WRITING THE TEXT FORTHE NEWSLETTER AND….

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

I WELCOME YOUR COMMENTS ON TODAY’SNEWSLETTER. 

Thank you for your kind feedback  and ESPECIALLY FOR YOU WHO HAVE DECIDED TO MAKE A MONTHY CONTRIBUTIONS.

Charlotte Hudgin, The Armchair Investor

May your stock portfolio grow and grow and grow like this family!  

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