Armchair Investor Newsletter 2023-11-30H UPTREND Day 20. Market quiet today TQQQ is UP 153.6% this year!
Every chart has a story. Do you look for the stories in the charts you are interested in? The charts can give you big hints on where the stock is going. It takes a while to see the stories the charts are telling you. The reason I am so successful in the stock market is I always look for the story the chart is trying to tell me. And I trust the story.
Looking back at this market since it went Covid crazy in 2020, I am sooo glad I look for the charts’ messages. I hope you will, too. Here is the current story with a look back to the beginning of Covid.
The Nasdaq moved sideways for the last5 days holding just below its July 2023 high.
Below is the StockCharts.com weekly Nasdaq chart that goes back to November 2019 near just before the Covid pandemic began.
Much to my surprise back then, after the one month drop at the start of Covid, the market bounced back and took off flying higher for the next 18 months.
NOTE: I expected the market to drop for the next year with all that COVID bad news. This experience was another example of “believe the market, not your own“fine” opinion.” The market is always right!
After the Nasdaq dropped hard in the beginning of 2020, and then rose for most of that year (what a delightful surprise!) to the high of 16,212.
The Nasdaq surprised almost every experienced investor I talked to when it rose from about 6,500 to 16,000 1 ½ years.Unfortunately, many of the first time investors thought THEY were brilliant –just look at the returns they earned!
But sadly, it was the luck of the market more than their experience or knowledge that paid them so well. (Heck… I would rather be lucky than right, too.)
Note that although the Nasdaq has made a very strong comeback since the Covid’s market drop in February-March 2020, it came back and took off to new all-time highs reached in November 2021. That November 2021 price action holds the record for Nasdaq all-time high.
Next the Nasdaq dropped 36% over 2022!(How’s that lucky streak working?)
Now we are enjoying a bounce back to higher highs again and I am “all in.”
Note: When the Nasdaq dropped in the beginning of 2010, I fully expected that drop to continue for the next year. But the amount of money employees earned from separation packages, etc. was not expected. And the unemployed had not much to do, but put their money in the stock market– which drove it higher, attracting more investments, driving it even higher….repeat!
So where are we today? I hope you have followed this newsletter and made the triple digit returns we talk have shared with you.
Beware! I have talked to some of the new investors who wish the market were more exciting. Sure they love the returns they have earned,but they want to bet on companies that intrigue them instead of the stocks with strong fundamental like the QQQ and TQQQ.
I’ll take bigger returns over the excitement of “wobbly” investments any day!
ON TO TODAY’S MARKET:
The market is getting healthier- as I see in the Accumulation/Distribution table later in this newsletter. The sum of the stock’s with “A” and ”B” ratings has risen from 22% of the stocks 4 weeks ago, to58% over the last 4 weeks. Wow!
INVESTING QUESTION FOR TODAY:
Would you rather have:
(A) A bumpy exciting investing ride with daring dips and unexpected turns? Or
(B) A more boring investing strategy that consistently grows more?
You’ve seen what I can do for you with option (A) above.
I hope you will stay with us! And enjoy the increased cash flow.
The ACCUMULATION/DISTRIBUTION table is important because it tells you two important aspects of the current market:
· How well is the market doing currently? And
· How well am I doing currently.
If you are invested in the market, you get the big prize – not the enjoyment of a theoretical win, but …. A real win.
ADVICE FOR FIRST TIME INVESTORS:
If you are new to the stock market, I strongly suggest you “paper trade” – put your ideas down on paper – pick the stock you want to invest in, when to get in and when to get out. Once you develop a winning track record, start with a small investment until you develop the confidence from a winning track record.
When you see the ACCUMULATION/DISTRIBUTION table below, look at how the market is doing. “A” and“B” rated stocks are having the best returns.
You can find these ratings in Investors.com.
Remember: There will be prolonged downtrends and we will let you know when to use the INVERSE TripleQQQ – the SQQQ which earns gains when the market falls.
I hope you are still riding the TQQQ at least some of the year and you now appreciate the value of riding the trends in a TRIPLE vehicle! I love the TQQQ gains when the market is in an Uptrend.
NOTE:Most years are not as easy as 2023 has been. Some years require going to the INVERSE ETF that makes positive returns in a falling market.
As you follow the ARMCHAIR INVESTOR NEWSLETTER, you will see we have taken a simplified approach to investing. It is fast and frequently pays a high return.
When the market changes its direction, I will explain:
· WHY I get IN and OUT of the TQQQ
· WHY I use the SQQQ (inverse triple QQQ) to earn positive returns while the market is falling.
· And WHY I sometimes go to CASH.
I will focus more on the KISS advice from Investors.com founder William O’Neil and advice from Fred Richards, a good Dallas friend of mine and a long-term friend of William O’Neil – from the time they were both in SMU (Southern Methodist University here in Dallas), until O’Neil’s recent passing.
The growing health of this market can be seen in the increase in the percent of stocks with A or B ratings in the table below rising from just 21% 4 weeks ago to 57% on Tuesday. I am much more excited about buying individual stocks today than I was a month ago..
Here is the history of the Nasdaq index (fastest moving and the one I put my money into.) Note: When the Nasdaq is rising, I color the Nasdaq’s price GREEN that day. When it falls,I leave it white.
As you scan down the chart it is easy to see this is a nicely rising period.
NOTE THIS WARNING. Holding onto a falling stock, whether an ETF or the stock of a favorite company, is a quick way to loose your recent gains. If you play individual stocks and ETF’s, play carefully. Use the real returns (daily, weekly, monthly)
Remember ….. down is down. 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 let you sleep at night.
FOR THURSDAY,I SUGGEST YOU WATCH THE OPENING OF THE MARKET AND SEE HOW THE QQQ SHOWS UP. IF THE MARKET OPENS with a significant DROP,YOU MIGHT CONSIDER WAITING IN CASH.
REMEMBER: _____EVEN IF CASH IS A VALID POSITION,…in a fast rising market,you should consider holding a position that allows you to position your portfolio to rise with the market (or a multiple of it.) Stay tuned! And watch daily!
Those birds just aren’t going anywhere!
Stay tuned! Those birds just aren’t going anywhere!
One additional “Word to the Wise”…
>>>>>--- MOST MARKETS FALL FASTER THAN THEY RISE. Beware of buying any new positions unless they are very healthy.
Wishing you big returns in your portfolio!.
I APPRECIATE YOUR CONTRIBUTIONS FOR SUPPORTING THIS NEWSLETTER. I USUALLY SPEND AT LEAST MORE THAN 4 HOURS RESEARCHING THE IDEAS IN THIS NEWSLETTER, CALCULATING ALL THE DATA I NEED, WRITING THE TEXT FOR THE NEWSLETTER AND…. FORMATING THE NEWSLETTER.
Thank you for your kind feedback and ideas. Please keep sending them.