2024-05-14T Armchair Investor Newsletter. Nasdaq hits high of the last 20 days

May 14, 2024

2024-05-14T Armchair Investor Newsletter. Nasdaq hits high of the last 20 days

 Nasdaq and S&P500 Hold Near March-April Highs with Higher Volume on Down Days. The Nasdaq held near its April highs for 2 ½ months! Is this the summer doldrums hitting early?

 

The market dipped in April then climbed back up thru the March highs in the first week of May (last week.) That’s 7-weeks without moving past that March high.  

>>>  I repeat… If you are not yet in this market, consider watching for a significant upday (or 2 or 3 days) that break through to a new high with higher volume to get back in.

The Nasdaq is NOT showing much upside strength – its minor accumulation day had a small 0.3% rise with a 0.3% volume increase. Those numbers are barely notable.  

Is this the summer doldrums? Or something else?  I don’tknow – but I am most concerned about all the higher red volume bars indicating more selling than buying.

>>> MY CURRENT ACTION PLAN IS UNCHANGED: Noting the week of low volume, I wait in CASH and watch daily for a breakout to a new high!

Although the Nasdaq did rise 0.3% Monday with higher volume for a very minor accumulation day, its low volume did not have enough power to the move to excite me into buying more –especially since the S&P500 and DJIA had disappointing price movements.

After climbing higher over the last 3 ½ weeks (which was really just a recovery after theApril dip,) the Nasdaq is again stalled near the March – April highs. That’s 9+ weeks of the market hitting its head on a Nasdaq high that has gone…… nowhere.

HERE’S THE BIG NEWS – HOW DID THE EXCHANGE TRADED FUNDS FARE SINCE THEIR RECENT LOWS?

>>>> THE ETF TABLE BELOW COULD BE YOUR TICKET TO EARLY RETIREMENT. BE SURE TO WATCH THE ETFs DAILY.

Look at these 2024 gains below! Focus on the TQQQ I hope you have been in the TQQQ (triple QQQ) for much of this runup.

 

>>> I’m sure you see why betting on the TQQQ in a consistent upturn is a beautiful wayto grab a nice return!

NOTE:  I am NEVER shy about selling a stock to pocket a profit or to stop losing money init. But Monday’s and Tuesday’s significant volume drop makes me wonder whether the holders of the TQQQ are getting shy???

The TQQQ has been areal winner for me.  I am still quite excited about the rises of the TQQQ! 

IF YOU ARE NEW TOTHIS STOCK TRADING GAME, please consider tracking the stocks you are interestedon “paper” before you invest heavily in them. You can learn what signs to look for in the price and volume action before you invest heavily in the stocks youare interested in.  It’s called….

 

PAPER TRADING:  If you aren’t comfortablegetting in the inverse QQQ (or triple inverse QQQ called the SQQQ), consider holding a small position ON PAPER  (which means you don’t buy any of the stock, but you track it on paper as if you had…to see how great the market treats you!)

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

If you missed mynote and chart about the SQQQ (the triple short QQQ), just think “inverse.” 

That’s what “shorting” a stock does. That short position in the SQQQ will rise when the QQQ and TQQQ fall.

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? (see chart below) Just sell the TQQQ (or any other QQQ you own), and  wait in CASH….. It the TQQQ continues tofall, buy the inverse – the SQQQ which will rise when the TQQQ is falling. That is what an “inverse” stock does.

On the 20-day HISTORY of the Nasdaq PRICE AND VOLUME chart below, note that 6 of the last 9 trading days were rising days, although only the last 2 trading days also had higher volume– for accumulation days.

>>> MY CURRENT ACTION PLAN: Hold the TQQQ!

Comment: I have not earned as much playing the S&P500 as do in the TQQQ. So I stay with 100% of my investments in the TQQQ or SQQQ when the market is clearly falling.

Note the sum of A and B rated stocks is a strong 50%.

>>>Note: TheAccumulation/Distribution table is now corrected!

The only way we will know which way the market is moving is to watch the market….. each day.  

Please consider reviewing this newsletter DAILY:  The markets can change direction and strength quickly!

NOTE THIS WARNING.  Holding onto a falling stock, (whether an ETF or the stock of a favorite company), is a quick way to lose your recent gains. If you play individual stocks, play carefully. And follow the daily returns as shown in this newsletter.

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 forfuture rallies and lets you sleep at night.

 Oneadditional “Word to the Wise”…

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

Wishing you best returns in your portfolio!.

 

Charlotte Hudgin, The Armchair Investor

(214) 995-6702

May your portfolio grow bigger every day!

 

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