3/15/2023W I’m in CASH waiting for QQQ to show clear direction.
THE MARKET’S MESSAGE: Both Nasdaq and S&P50 have lost ground over last 6 weeks.
PLEASE NOTE’S NEWSLETTER INCLUDES SEVERAL PROPOSED CHANGES PLEASE READ THE NOTES BELOW AND, IF YOU HAVE SOME COMMENTS OR ADDITIONS FOR ME TO CONSIDER….
PLEASE SEND YOUR COMMENTS TO >>>>> EDITOR@ARMCHAIRINVESTOR.COM/
As I fussed around with the Nasdaq and S&P500 tonight, I had an epiphany. I don’t care how the Nasdaq and S&P500 are doing as long as I am earning good returns in the QQQ. Yes, I will continue to compare my QQQ returns to those major indexes, but neither you nor I can invest in the Nasdaq (that is why I use the QQQ – the 100 largest stocks in the Nasdaq except the sleepy financial.)
What I really care about is how am I doing with my QQQ investment. And that is what I have always used since I started this newsletter almost 20 years ago.
So I will no longer spend much time on the Nasdaq because neither of us can invest in it. I am unlikely to invest in the S&P500. Recently I showed a comparison of the S&P500, the Nasdaq and the DJIA – and the Nasdaq blew the other away, long term.
So let’s focus on where to put our money that is most likely to earn the highest return with controlled risk (i.e. no stocks of individual companies).
I have shown the S&P500 below which you can invest in directly. And I will show you how the QQQ (Nasdaq 100) almost always outperforms the S&P500.
I welcome your input about this shift – and any other ideas you have to improve this newsletter.
I am more concerned about getting today’s results out to you readers
BOTTOM LINE: I wait in cash, watching for how the Nasdaq behaves tomorrow.
CAN YOU SEE THE CHANGE IN MARKET PERSONALITY OVER THE LAST 10 TRADING DAYS BELOW? (I may keep this following table in Nasdaq numbers. Please let me know if you have a preference and why. Recreating this newsletter is very enlivening to me. I look forward to a more streamlined and effective result for you, my readers.
>>>>>> PLEASE SEND YOUR COMMENTS TO EDITOR@ARMCHAIRINVESTOR.COM
On the MARKET FACTORS, COUNTS & RATINGS table below, note there are only 5 GREEN ”Type of Day” boxes. (rightmost column) of UPTREND and the Nasdaq’s A” Accumulation rating and Nasdaq is the only index above its 50-day moving average line (by at least 2%).
Look at the rightmost column ….. and not the change in density of “Downtrend” days in the last 8 trading days, there were 6 days “consistent with” a Downtrend but only 2 days were “consistent with” an Uptrend.
>>> This recent shift to more negative price/volume action shows this is a fairly weak market.
On the MARKETFACTORS, COUNTS & RATINGS table below, note there are only 5 GREEN ”Type of Day” boxes. (rightmost column) of UPTREND and the Nasdaq’s A” Accumulation rating and Nasdaq is the only index above its 50-day moving average line (by at least 2%).
Look at the rightmost column ….. and not the change in density of “Downtrend” days inthe last 8 trading days, there were 6 days “consistent with” a Downtrend but only 2 days were “consistent with” an Uptrend.
>>> This recent shift to more negative price/volume action shows this is a fairly weak market. Will we see a deep dip next
Note In the table below, you will almost always see only red across the bottom row,because as soon as an index hits a new high, if it closes down just 5%, it will show its price below the prior high.
Are you holding onto stocks that you like in spite of their chart action? Not me! Cash is always a safe alternative. But note with this broad rotation (past highly rated stocks being sold and under rated stocks being bought,) THERE MAY BE AN OPPORTUNITY TO IDENTIFY NEW RISING STARS!
>>>>> When you look at the last 4 weeks of the ACCUMULATION/DISTRIBUTION RATINGS table BELOW, what do you see happening?
Look at the change in percent of A-rated plus B-rated stocks (right most column) over the last 4 weeks!Wow.
Yes! The A and B rated stocks have dropped in half (from 62%to 31%.) That happens when the prior winners are being sold off to take the profits “off the table” and put them in the investors’ pockets.
>>>>>>>>>>>>> PLEASE READ THE FOLLOWING NOTE >>>>>
NOTE: A long time ago, I learned (after paying for this lesson multiple times…..) I learned two important lessons:
1. I am NOT smarter than the market. And,
2. The market does not care about my “fine”opinion.
When I see the institutional investors selling hard (as shown by the drop of ”A” and “B” rated stocks), I am happy to step out of the market by selling my QQQ position.
NOTE: If you have individualstocks or ETFs that are holding up well, you certainly can hold them. But please keep a tight rein on them.
Remember: Stocks usually fall faster than they rise!
Wishing you, “Many Happy Returns.”
Charlotte Hudgin, The Armchair Investor, (214)995-6702