2024-01-31W: The Nasdaq dropped 2.2% Wednesday. The QQQ dropped -2.0% (a little less) and the TQQQ dropped 5.9% (slightly less than 3 times the Nasdaq.)

2024-01-31W:   The Nasdaq dropped2.2% Wednesday. The QQQ dropped -2.0% (a little less) and the TQQQ  dropped 5.9% (slightly less than 3 times the Nasdaq.)  

Were you surprised when the major exchange traded ETFs (exchange traded funds)dropped so much on Wednesday? They only showed how well the ETF fund managers are doing their job: Keeping the exchange traded funds’ movements in line with the market moves. (And we don’t have to like it!)

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Remember:The triple ETFs play a big game… and so are you if you follow this newsletter. Not every day will be a rising day. Most importantly, the QQQ, QLD and TQQQ moves have been closely aligned with their 1X, 2X and 3X targets.

Did you know these three funds are run by two different firms?  

·      The QQQ is managed by Invesco (the first major ETF to follow the Nasdaq 100.)

·       The QLD (double QQQ) and TQQQ (triple QQQ) were created later are managed by ProShares.

It’s the QLD and TQQQ that have real challenges to meet their 2x and 3x goals. Their managers have to be quite creative to maintain the multiples. Until recently,the TQQQ usually performed better than the double QLD but less than 3x. And yet, in last year, ProShares did a great job at meeting their intended 3x goal.

Bottom line: You have to take the 2Xand 3X ups and downs as they follow the market. Since the QLD and TQQQ have grown so closely to those goals (and I have no other convenient way to earn those multiples,) I happily put my investment in the TQQQ, being very happy with whatever slight variation of 3x that they earn.

(If you have a better investment vehicle to use for the 3x return, please let me know.)

Turning to the major indexes: As usual, the Nasdaq moved the most, the DJIA made the smallest move, and the S&P500was very close to an average of the two.  

SAD NEWS:  Every Uptrend eventually ends. And Wednesday’s dip may have signaled the end of the recent, Nasdaq runup with a 44.9% gain. But stay tuned… There have been many weeks that did worse since the December 31,2022 turn up.

In today’s Big Picture column, IBD said:

“Stocks today suffered one of their deepest losses in months after the Federal Reserve, as expected, held steady on interest rates Wednesday.

The sharpest moment of the day's sell-off? It came after Fed Chair Jerome Powell commented during a news conference that the U.S. central bank is unlikely to begin lowering the cost of money in March.  

In another IBD article (The Fed Isn’t Quite Ready to Cut Rates; S&P500 falls), the Federal Reserve was said to signal it is considering cutting its key interest rate but …. not yet.

On to A,I, ,,,,

>>> Are you diving into AI (Artificial Intelligence)for your investing or your business?

As the Artificial Intelligent tools begin coming widely available online, expect the market to move faster.

When a new game-changing technology like AI blooms, you have 2 choices ……

(1) Learn it and use it! ….or

(2) Miss the biggest value of being a leading innovator!

On this coming weekend, I will be online (Friday to Sunday)learning how to use AI tools in my investing from an extraordinary team of A Iexperts. Stay tuned!

Meanwhile, back to Fed Chair Powell who seemed to imply that a couple of more tame inflation readings could put a rate cut on the table.

Expect the weekend newsletter to be short (I just won’t have much time at the 3-day training.)

HANDLING THE TRIPLE QQQ IN YOUR PORTFOLIO (REPEAT)

>>>The big difference in the3 ETFs in the table above is…. the TQQQ pays off about 3 times the QQQ. But remember,…. When the market turns down, the TQQQ drops about 3 times as fast as the QQQ.

>>>>“Make mine a TRIPLE, please!” is great in an Uptrend, and can be a killer sponge on your portfolio in a Downtrend.                                        

So relax and lean back…. And enjoy the bigger gains of the TQQQ as you watch each day to be sure the market and the triples aren’t taking away your recent gains..

>>> MY PLAN FOR FRIDAY and MONDAY:

>>> Check in on the TQQQ at least every 2 or 3hours…. just to be sure it isn’t failing. A quick peak doesn’t take long.

NOTE: At some point, someday, the TQQQ will fail.  I would rather get out earlier than later and risk a bigger loss.

REMEMBER: I DO NOT KNOW HOW TO PICK THE TOP OR THE BOTTOM OF A RUN but I usually get closer than most. If I sell the TQQQ because its price is dropping, I can go to cash or the inverse as appropriate index to protect my capital,

If the ETF resumes upward progress, I can always JUMP back in to the TQQQ..

>>> NOTE: The nice thing about the TQQQ is that it can make a lot of money for you when it is rising.  THE BAD NEWS: It can QUICKLY LOOSE THOSE GAIN IN A QUICK MARKET TURNAROUND IF I AM NOT PAYING ATTENTION.  

Really…. How long does it take to look at the current price chart? Just a wink if you have it set up on your phone or computer.

What I like best about the MARKET FACTORS, COUNTS &RATINGS table below is the number of Accumulation days versus the Distribution days. That ratio gives a strong sense of the strength and direction of the current market. If the 4 UP days and 2 DOWN days confuses you,note that I do not count a day’s move unless it was at least 0.2% up or down.

THE SECTION BELOW IS A REPEAT OF YESTERDAY’S NEWSLETTER

What should you do when the market starts falling (and it always does…. eventually.)?

Just read this newsletter that night and I will give you a simple solution based on what the market is doing then.

>>>>>REMEMBER:  I do NOT know how to:

·      Get in at the bottom or

·      Get out at the top.

·      But I have consistently gotten closer than most other advisors…. And that timing has returned significant growth in my portfolio and those report from elsewhere.

Are you concerned that the market may have risen as much as it can for the moment? You might be right … but I’m not worried.

>>> The current Uptrend is to still showing moderate strength.  

NOTE:  IF YOU EVER SEE AN EMAIL FROM ME IN THE MIDDLE OF THE DAY (which happens rarely), consider giving it a quick read. It MIGHT include a change of strategy you can implement during the day to reduce your losses as the market falls or to save more of your prior wins.

·      Remember:The market and individual stocks continue in the direction they are going…until they don’t.

>>>> Please read this newsletter nightly to be sure you don’t miss my notes on when and where the big growth (or fall) is happening!  

I hope you have enjoyed an investment in the TQQQ (triple QQQ.)  They have grown almost 4 times the single QQQ this year. ….. But remember…. The TQQQ also can fall at 3 (or more)times the QQQ.  

What to do about the high volatility of the TQQQ?

>>>I suggest you read at least the first two pages of this newsletter each night.  This action will keep you tapped into the current market. And remember:

·      I do NOT know how to get in at the market bottoms and out at the tops. ----- I just get closer than most others. Note on the above table the price/volume action of the last 20 days. Only 3 days were Distribution days –when the price dropped and the volume rose, indicated some serious selling.

>>>>>FINALLY: REMEMBER:

 As of 1/31, in the stock market:

“What goes UP, UP, UP….. eventually goes DOWN, DOWN, DOWN! “

The MOST RECENT 10 days on the 20-daylist above,

>>>3 of the last 4 days were DOWN DAYS with yesterday’s 2.2% drop being the worst!

Only one of those 3 rising days had a significant (2.2%) rise. And that 1/8 day had extraordinary volume of 20.6%increase… a nice way to kick off the week.

Look at the amazing percentage of stocks that have “A” or “B” ratings – Even after a drop from recent A+B rated stocks owning 732%.... today’s 58% As+Bs is still strong.!!!

Wednesday’s Accumulation/Distribution table:

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 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.

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 (o r a multiple of it.) Stay tuned! And watch daily!

Stay tuned!   Those birds just are back and they brought some friends!

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 MORE THAN 4 HOURS:

·      RESEARCHING THE IDEAS IN THIS NEWSLETTER,

·      CALCULATING ALL THE DATA I NEED,

·      WRITING THE TEXT FOR THE NEWSLETTER AND….

·      FORMATTING THE NEWSLETTER.  (Today it was more like 5 hours.)

I WELCOME YOUR COMMENTS ON THE MINOR CHANGES IN TODAY’S NEWSLETTER (as described in the notes.)

Thank you for your kind feedback and ideas. Please keep sending them.

Charlotte Hudgin

The Armchair Investor

CharlotteDH100@mail.com

(214) 995-6702