2024-04-17W Armchair Investor Newsletter. Market is in DAY 3 of a DOWNTREND

2024-04-17W Armchair Investor Newsletter.  Market is in DAY 3 ofa DOWNTREND

Aren’t you glad you got out of the market today! (or Monday or Tuesday if you were more agressive.)

>>> The Nasdaq is down 4.6% in just the last 4 days.

Remember: When the market is falling, a short position rises. (When you seea “short” position, remember the holder is earning or losing the opposite ofthe market.)

After Monday’s market declines, Tuesday was a quiet, small move day. I’m OK with that small move. Tuesday’s higher volume helped confirm the market’s downward reversal.

But has the market found new footing?  

>>>> Nothing indicates to me that the market’s decline is over.

OH! Wait a minute!  If you have followed this newsletter, you have already exited the market Tuesday and have joined me in the solidity of CASH! If you haven't gone to cash yet, I recommend going to cash the  first thing at the market open Thursday morning!

And if you believe the downward movement is not yet over (as I believe), it is OK to go into the INVERSE SQQQ.  

We will continue to visit the market tables as we have every day. You may be watchingit as an observer from the sidelines instead of as an owner.  That is OK! Every new investor has to come to grips with the inverse ETFs.  

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

Remember…. If the market daily action gets you very uncomfortable, CASH is always a pleasant place to hide out! But please take notes – notes of your feelings about the market each day…. And notes at the end of the day about what actually happened. After I had done that about a half dozen times, I started to surrender to the reality of the market…. It will go UP and it will go DOWN.  And I can make money both ways!

But when you see the major indexes fall hard (as they did over the last 2 days - see chart below) and you have moved to the SQQQ (the INVERSETRIPLE QQQ), I hope you are pleased with the winning results. And as you look at the major index fall,…. Remember: In a downward market, playing the INVERSE game could be a BIG WINNER for your inverse holdings as they rise!  

PAPER TRADING:  If you aren’t in the inverse QQQ (PSQ) or inverse TQQQ (SQQQ) yet, consider tracking it on paper.  Waatch what your portfolio would have earned as the Nasdaq falls.

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

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

And visa versa.

And remember… I do not know when the market direction is going to change. (I am almost always at least a day late because I wait for the price to actually go in the other direction.)

>>> Friday’s opening loss was all I needed to get out and wait on the sidelines in cash! (step one toward going “inverse!”)

Now note the market did the jitter bug dance for about a third of the day on Friday… before falling hard.  That drop would have been a hard one to catch.

Now that I believe the market is in aDowntrend, I am happy to be in the SQQQ to reverse the market’s drop in my portfolio.

04/17/24 Overall, Monday andTuesday were great days to get short!

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

>>>>Go back up to the TQQQ chart to see how I have earned about 3x that Nasdaq return through mid-March.  

But since the high on March 21, the TQQQ has fallen 14.1% OUCH! And most of that fall happened in the last 4 days. And all 4 ofthose down days had above average volume.

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

And the TQQQ continued lower Friday and Monday,... was flat on Tuesday and dropped a scary 3.7% on Wednesday (today) with above average volume for another Major Distribution day.

>>>>SELLING THE TQQQ LAST FRIDAY WAS A VERY RIGHT DECISION!

Note: You cannot invest in the Nasdaq composite – it is thousands of stocks. There is no investable basket for the Nasdaq. The closest option is the QQQ. The QQQ ETF (basket of top 100 stocks in the Nasdaq without the 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.) And here’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 is better than just holding a 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)?  Then shouldn’t I be in the inverse (short)ETF? ….. YES!

The market is falling…. not rising.

To emphasize that direction change,…

What did the market do on Friday?…..Down

And what did it do Monday and Tuesday?... Down and Down

And Wednesday…Down

Get it???  The market is now in a Downtrend!

 >>>Do you have any triple rising stocks?  If you are inverse in those stocks, you may be losing money.  Should you decide to jump out?  It’s all YOUR decision.  

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

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

Yes, I was under the weather over the last 3 days and did not catch the market direction change.

>>> MY CURRENT ACTION PLAN:  

The Accumulation/Distribution table for the current market is 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 WARNING YOU that the market is in a correction and you should consider some protective moves. )  

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.  Was I wrong on calling the market in a Correction (Downtrend)?

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!

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