2024-04-24W Armchair Investor Newsletter. The Market Pauses causing a “GHOST” (white) MARKET ACTION

2024-04-24W Armchair Investor Newsletter. The Market Pauses causinga “GHOST” (white) MARKET ACTION

Last week the market fell 7.1% over 6 down days in a row.

On the 7 days starting on Friday, 4/12, the market fell HARDfor a significant drop on the Nasdaq.

But in this week, Monday gained 0.9%, Tuesday gained another 1.6% and Wednesday (today) added a smidge more of 0.1%, for a total rise of 2.6%! And I declared a new Uptrend. Was I too aggressive?  We may find out tomorrow.

Over the next 6 days, the TQQQ dropped each day for a serious 15.7% loss. I hope you chose a time togo to cash early in the week.

‍Monday started a new week and a new trend >>> UP!

‍The 3 days of this week all contrived to move 2.8% higher.The stock is still below the long term red 50-day moving average line. But noteall three of the rising days this week, had below-average volume.

For the current week, the TQQQ rose on Monday, Tuesday and today, Wednesday for a total 3-day rise of 8.5%!

NOTE: Although the price rise on the first 3 trading days this week was strong, the volume was at or below the moving average for all three trading days this week.  CONCLUSION: The market is NOT yet showing enough upward strength to get me excited.

Remember---  In a falling market,you should look for the INVERSE ETFs to be rising.  When the volume of the current trading days is low, I question the viability of the market rise overthe last 3 days.

If the market takes a significant reversal back down, I will probably sell my triple ETF. If the rising market reverses, I may buy the SQQQ. As long as the market is falling, I would make some money.

Look at the current table of the THREE MAJOR MARKETS. The Nasdaq and the S&P500 are holding their recent rises. (As usual, the DJIA is just limped along.) It is unusual to see a “ghost” price action table, but here are the frozen indexes.  

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Look below at how well the three QQQ ETFs are staying in order! The day’s rises were very close to 1, 2, 3 proportions. (the following table is 1 day old - but very close to today's Major Exchange Traded Funds table

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‍We have lost about one third of the rise from the October 2023 low. If you have gone short…. (in the SQQQ perhaps), you will see your portfolio rise as the indexes fall.  (Good job!)  

But note: The market has RISEN for the last 3 days. If you are short the TQQQ, you might consider shifting to a long position after the 2.9% rise on Monday, the 4.4% rise on Tuesday and another 1% rise today.

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If you have gone short…. (in the SQQQ perhaps), you willsee your portfolio rise as the indexes fall. (Good job!)  But now it looks likethe market has fallen as much as it is going to at the moment.

Do the 2 rising days in a row, confirm a new Uptrend?  Two days in one direction is NOT enough forme to declare a new Uptrend.  

BUT I am optimistic! …. stay tuned!

PAPER TRADING:  If you aren’t comfortable getting in the inverseQQQ (or triple inverse QQQ called the SQQQ), consider holding asmall position ON PAPER  (which means youdon’t buy any of the stock, but you track it on paper as if you had… to see howgreat the market treats you!)

For your information: The TRIPLE SHORT QQQ  is the SQQQ.

If you missed my note and chart about the SQQQ (the tripleshort QQQ), ju st think “inverse.”  

·      When the QQQ falls,

·      The short QQQ (the SQQQ) rises.

·      The Triple QQQ (TQQQ) risesabout 3 times as much. Wow!

It may seem strange, but the charts will look very similar….Until you do the math and see the 3x factor in the pricing.

What can we do when the TQQQ is falling? e chart below) Just sell the TQQQ (or any other QQQyou own), and buy the inverse – the SQQQ.

BOTTOM LINE: A triple of any stock that is winning is better than just holdingthe single stock.

I LOVE THE WAY MY 20-DAY TABLES (below) make themarket reversal soooo clear. I want to see at least one or two more strong,rising days to declare the market is back in UPTREND!

NOTE: *  The GREEN datebox in the date column above means the Nasdaq hit an all-timehigh closing price! Wow!

The most recent three rising days (Monday, Tuesday and Wednesday) set the market up fora new Uptrend.  I may be jumping in a little early to declarea new Uptrend has begun. But my intuition tells me the market has shifted.  Wednesday was FLAT adding uncertainty to the market’s next move.  

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>>> MY CURRENT ACTION PLAN:  

BE LONG IN THE Nasdaq (the QQQ.).

And be LONG in the S&P500 if you play theS&P500.

I have not earned as much playing the S&P500 so I staywith 100% of my investments in the QQQ or TQQQ.

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 STRONG  56% today (bottom right-most percent) only 3% belowthe highest rating in the last 5 weeks.

(The above comment is my way of explaining to YOU that the market is looking UP! And you should consider somewhat higher moves. )  Look at the sum of the As and Bs that shiftedfrom 44% As + Bs to today’s 56% As and Bs.  

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

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

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

Please consider reviewing this newsletter daily:  The markets can change direction and strength quickly! Notethat 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.

>>>> Stay tuned for Thursday’sand Friday’s results!

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 ArmchairInvestor 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.)