2024-04-18H Armchair Investor Newsletter. Nasdaq and S&P500 extend losses.

2024-04-18H Armchair Investor Newsletter. Nasdaq and S&P500 extend losses.

Aren’t you glad you got out at the market open sometime over the last 5 down days?

If you didn’t,think about what lesson you paid for by staying in.

Or did you go short? CONGRATULATIONS for a market winning decision.

>>> The Nasdaq is now down 5.1% in just the last 5 days. Ouch!

Remember: When the market is falling, a short position rises. (When you seea “short” position, remember: The holder is earning or losing when his stocks goes opposite to the investment he made.) 

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

>>>>>Now Wednesday and Thursday were also down days.

Has the market found new footing? Is it starting to rise??? NO!!!! Nothing indicates to me that the market’s decline is over.

If you follow this newsletter, I hope you already exited the market on Tuesday’s big drop 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 Friday morning! 

And if you believe the downward movement is not yet over (as I believe), it is OK to buy into the INVERSE SQQQ which will RISE as the market  falls.  

We will continue to visit the market tables as we have every day. You may be watching it as an observer from the sidelines instead of as an owner.  That is OK!  Please write down your daily thoughts about the market so you can tune up your personal market evaluation tool.

Look at the Nasdaq chart below – and see the recent bleeding of the Nasdaq.  Since you can’t buy the Nasdaq, lets look at the QQQ

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 wait it out!

But please take notes –notes of your feelings about the market each day…. And notes at the end of theday about what actually happened.  AfterI had done that about a 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!

When you see the major indexes fall hard as they did overthe 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 lookat the major index fall,…. Remember: In a downward market, playing the INVERSEgame could be a BIG WINNER for your inverse holdings as they rise!  

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

NOTE:  If you are new to the inverse ETFs justthink “upside down.”  

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

And visa versa.

As I say repeatedly… I do not know when the market direction is going to change. (Iam almost always at least a day late because I wait for the price to actuallygo in the other direction.)

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04/18/24 The three Exchange Traded Funds are shown below - they all dropped this week. The Monday through Thursday results of this week are staying in perfect 1x, 2x, and 3x!.

If you missed this explanation of the 3 Major Exchange Trqaded Funds 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  on March 21, the TQQQ has fallen 14.1% OUCH! And most of that fall happened in the last 4 days. And all 4 of those down days had above average volume.

I sold theTQQQ at the open on Friday as I said I would if it opened lower – and itdid.  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, Monday, was flat on Tuesday and dropped a scary 3.7% on Wednesday (yesterday) 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 THETEST.  Reread the statement above an ddecide 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 emphasizethat 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!

>>>>>>>>>Get it???  THE MARKET IS NOW IN A DOWNTREND!

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>>>Do you have any triple 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 theNasdaq hit an all-time high closing price! Wow!

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

>>> MY CURRENT ACTION PLAN:  

The Accumulation/Distribution table for the current marketi s 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% below the 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)?

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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 isholding 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, 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 letyou 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 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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