2024-04-16T Armchair Investor Newsletter. Market has Day of Very Small Moves

2024-04-16T  Armchair Investor Newsletter.  Market has Day ofVery Small Moves

 Aren’t you glad you got out at the market open today!  Did you go short?

Remember: When the market is falling, a short positionrises. (When you see a “short” position, remember the holder is earning orlosing the opposite amount.)

After Monday’s market declines, Tuesday was a quiet, a small move day. I’m OK with that small move. But has the market found new footing? Or is it going to continue downward?

OH! Wait a minute! If you have followed this newsletter, you have already exited the market and have joined me in the solidity of CASH!

If you haven't gone to cash yet, I recommend it first thing at the market open Wednesday morning!

Wewill continue to visit the market tables as we have every day. We will just bewatching it as an observer instead of an owner.

If you have gone short…. (in the SQQQ perhaps) you will see your portfolio rise as the indexes fall (if they fall.)

Remember….If the market daily action gets you very uncomfortable, CASH is always a pleasant place to hide out!

But whenyou see the major indexes fall hard (see chart below) and you have moved to the SQQQ (the INVERSE TRIPLE QQQ), I hope you are pleased with the winning results.And as you look at the major index fall, remember you are playing the INVERSE game (I hope.)  

If you are new to the inverse ETFs just think “upside down.”  

>>>Whenthe TQQQ goes down,….. the inverse QQQ (SQQQ) goes up!

I hope you see why following the strengths and diection of the Nasdaq and the QQQfamily (below) will reward you nicely if you get it right!  Sometimes that reward is simply missing moreof the market drops than other do - like getting out of the QQQ near the startof Friday’s drop…. Which would have included missing Monday’s 1.8% drop!

Of course, I do not know when the market direction is going to change. (I amalmost always at least a day late because I wait for the price to actually goin the other direction.

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>>>Friday’s opening loss was all I needed to get out and wait on the sidelines incash!  Now note that the market did thejitter bug dance for about a third of the day on Friday before fallinghard.  

On Monday (yesterday), as soon as the market undercut Friday’s low, I jumped intothe SQQQ (the triple, short QQQs. See the line at Friday’s low.)  And I skied down the rest of the hill. Whydid I wait to get in the triple inverse? I saw the market hesitate aboveFriday’s low and wanted a stronger downward signal.  I got that signal about 12:30 as the Nasdaq undercut Friday’s low and kept going.

Overall,Monday was a great day to get short!

If you missed this explanation on Monday,  I repeat it below.

>>>> Go below to the TQQQ chart to see how Ihave earned about 3x that Nasdaq return.  

I sold the TQQQ at the open on Friday as I said I would ifit opened lower – and it did.  And thenwhile I waited in cash, the TQQQ (and QQQ) dropped more.  SO THE “SELL AT OPEN” was a good decision.

And the TQQQ continued lower for most of the day.  

>>>> SELLING THE TQQQ WAS THE RIGTH DECISION!

We have made great returns I this runup of the Nasdaq.  But the index (and its QQQ and TQQQ) showed aloss on Friday’s open (when I sold it and went to CASH.)

Note: You cannot invest in the Nasdaq composite – it isthousands of stocks. There is no investable basket for the Nasdaq. The closestoption is the QQQ. The QQQ ETF (basket of top 100 stocks in the Nasdaq withoutthe slower moving financial stocks) earned 27.5% during the last 5 ½ months.

>>>>>With this gently falling market, I have moved to the inverse triple QQQ ETF - the SQQQ (the “S” stands for shorting.) Andhere’s today’s big win…  

As the QQQ falls with the market… the SQQQ (inverse triple QQQ) rises  about the same percent!  

NOTE THE TEST. Reread the statement above and decide what to do…..

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

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 The IMPORTANT QUESTION YOU HAVE TO ASK YOURSELF:

If the market has rolled over (which I believe it has) andstarted to drop, shouldn’t I be in the inverse (short) ETF? ….. YES! The TQQQwas a wonderful play to be while the market was rising.

But the market took a next step and is falling not rising. 

To emphasize that direction change,… What did the market do on  Friday….. And what did it do Monday and Tuesday?  Down and Down and Down.

>>>Just be sure to watch any triple stock daily soyou can decide when to jump out.  

I LOVE THE WAY MY 20 DAY TABLES (below) make the market reversal soooo clear.

NOTE: *  A GREEN datebox in the date column above means the Nasdaq hit an all-time highclosing price! Wow!

>>> MY CURRENT ACTION PLAN:  

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 moderate 56% today (bottomright-most percent) only 3% below the highest rating in the last 5 weeks.  

(The above comment is my way of WARNING YOU that the marketmay soon have a correction, which could grow into a larger drop.)  

The only way we will know which way the market is moving isto watch the market….. each day.) On Tuesday, the percent of Asand Bs rose a slight 2%.

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 Armchair Investor 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!