2024-03-05T: The Armchair Investor Newsletter. Market sells off for second day.

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2024-03-05T: The Armchair Investor Newsletter. Market sells off for second day.

Note that the stock market has risen for 16 of the last 18 weeks!  ‍The Nasdaq held just below its all-time on Friday and hit a new high on Monday. But on Tuesday,the Nasdaq gave back another 1.7%. That was a large bite off the new high.

Note the Nasdaq chart continues to hit new higher highs. But what is different about the last new high (3 days ago)…..

Yes, the Nasdaq did leap above 16,000, but can you see the difference?

This high fell short of the uptrend line. That makes me wonder if the Nasdaq rise is slowing down.  Let’s watch over the next few daysto see if the Nasdaq can find some new oomph!

Remember:  The key lesson among these tables and chartsis to:

·      Step back to see the what the charts are telling you.

·      And know how much of a dip you are willing ride

·      You can be cautious as the Nasdaq rises. One way to monitor the strength of this Uptrend is to watch out for an increase in distribution days (falling days on higher volume) which could point at a new top is here (or coming upsoon.)

Since the COVID dip near the start of 2020, the market has been quite volatile.  But if you stepped back and looked at the trends, you could have caught much of the uptrends. You might have been aggressive enough to short the 2022 market!

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The Nasdaq has risen back to the 2021 high and looks like it is pausing at that same point. Let’s given the Nasdaq a few days to see if it has another rise in it.

Let’s look more closely at the triple QQQs (all 3 forms of them shown below.) Note the 2024 gains are still staying in an orderly 1 – 2 – 3 relationship year-to-date.(Note continues below the QQQ table.)

As long as the Exchange Traded Funds are running up and then down for fewer weeks, you can make money during each rise and fall. But if the runs are short, you may want to just wait in cash. 

Note how well the fund managers are keeping their 3 Q-funds in well controlled in a 1-2-3 relationship  (-0.4%, -0.8%, and -1.2%!)  Even though the market slipped a little lower Monday, over most of the year, the gains are holding.

I am very pleased with the dependable 1-2-3 relationship the 3 ETFs – the single QQQ, the double QLD and the triple TQQQ. I am especially enjoying making those great returns on the triple QQQs (the TQQQ,)! 

The TQQQ has earned 23.0% (minor a small drop on Monday) in the recent 2 months! Yes,23.0% is not quite 3 times the 8.4% on the QQQ’s gain Tas of Tuesday. But it is close.  

NOTE: The longer the year runs, the more the double QQQ (QLD) and the triple QQQ(TQQQ) will very from the 2x and 3x numbers. But if you step back, you will probably see the double and triple continue to show moves close the 2x and 3x.

Since Covid hit, the market has been a wild (and profitable ) ride. The TQQQ hasr isen 91.0% (almost doubled!) since it’s low on October 26, 2023 as seen in Wednesday’s chart shown below.

Mypromise to you:  I will identify:

·       When the market is rising and you should be in it.

·       And when the market is falling and you should be out.

But please remember --- YOU are the master of your portfolio and, therefore responsible for when to be “in” and when to be “out.”

And always consider…. If you start to get frazzled with the market,… CASH can be agreat place to be when an investment shows what I call, “hesitation to rise on higher volume.”

‍Yes! And,the TQQQ should always get your ATTENTION FIRST even though the charts look similar. You have to do the math – figure out how much more the triple QQQ (TQQQ) has risen (or fallen) to decide what to do EACH DAY!

NOTE ……

I USE THE TRIPLE QQQs (the TQQQ) WHEN THE MARKET IS RISING CONSISTENTLY.  THREE TIMES THE GAINS IS ALWAYS BETTER THAN ONE OR TWO!

 And when the market is falling, the SQQQ will invert the market’s losses into gains. (A 1-to-1 relationship is NOT guaranteed.)

Note:It is always possible for my timing to be wrong. The market can reverse and start dropping the day after I identify a buy signal. Itis rare, but it can happen.  If it does, what should you do?  Without waiting for me to tell you, you could go to CASH! Which is always a safe place.

(And why not just save yourself some time and NOT consider using the TYPICALLY SLOWER MOVING S&P500.) 

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If you can’t sleep tonight because you know the TQQQ can drop 3 times as fast as the QQQ, I encourage you to take one of these moves:

·      First, look at a weekly chart (which takes out much of the annoying volatility),  

·       Second, realize that the TQQQ is climbing toward its recent high and is mostly rising (every investment has ups and downs.

·       Third, step back and see how they are adding up…. Are the investments rising or falling over all?

·      If you can’t sleep well at night knowing the TQQQ can fall 3 times as fast as the single QQQ, consider holding your investment in the QQQ and “paper trading” the TQQQ.

·      And stay tuned…. Note what happens next so you will see if the exit was the best idea….. The good news about the TQQQ is that they have paid me well in every runup I have used them.

MY PLAN: >>> If the market is moving higher consistently,  I simply put my money in the TRIPLE QQQ until the market starts to generate a smaller return or reverses down.

NOTE for the last 23 years I’ve been following the QQQs, and then, when they came along, the TQQQ (triple QQQ) and the SQQQs (the short triple QQQ), my portfolio has enjoyed an accelerated growth.  

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

MY PLAN:  It’s just 3 simple steps:

1.    Be in the TQQQ (triple long QQQ) when the market is rising.

2.    Be in the SQQQ (triple short QQQ) when the market is falling hard.

o   The SQQQ rise if you hold it because the SQQQ is an INVERSE ETF. It rises when the market it represents falls.

3.    And sometimes wait in CASH if the market is changing direction or is just “flakey.”  I’ll discuss any of those times later in this newsletter!

Isn’t it nice to have an investment that is likely to earn a positive return when the market is falling? (That is what an “inverse” ETF does like the SQQQ.)

>>>And if you ever get spooked, *CASH* is always a safe position.You may not make as much as being in a rising triple ETF but you will sleep better at night if you don’t extend past your comfort level. And a little practice will sure show you what you did right and what you did wrong, If you are willing to examine the big wins and losses.

Could it be any easier?  I have played the triple Note QQQ and inverse QQQ for years; ….even  before I had made much money in them.  They made sense then and they make more sense now.

So I continue my investing plan:

·       Hang on to the TQQQ when the market is rising.

·       Move to CASH when the market is unclear.

·       Change to SQQQ (the short Qs) when the market is falling.

I MUST complement the QQQ and SQQQ ETF managers! They deliver on their promise to ride the TQQQ up about 2.5X to 3X times the QQQ. In a

 >>> I happily put my investment in the TQQQ as long as the market is rising, being very pleased with whatever slight variation of 3x that they earn.

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>>>>>>>>MY PLAN FOR WEDNESDAY:   Be in the TQQQ.  <<<<<<<<<<<<

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REMEMBER: I DO NOT KNOW HOW TO PICK THE TOP OR THE BOTTOM OF A RUN until I see them in the rearview mirror.

But I usually get closer to the tops and bottoms than most traders.

>>>NOTE: The nice thing about the TQQQ is -- it can make a lot of money for you when it is rising.  

THE BAD NEWS ABOUT THE TRIPLE QQQs – BOTH the TQQQ and the SQQQ: You can QUICKLY LOOSE THOSE GAINS IN A QUICK MARKET TURNAROUND IF YOU ARE NOT PAYING ATTENTION.  Please visit this newsletter every day – even if only to read the first page.

IF YOU ARE GOING TO PLAY IN THE TRIPLE ETF UNIVERSE, YOU HAVE TO WATCH IT EVERY DAY….. OR BE WILLING TO BE UNPLEASANTLY SURPRISED (DISAPPOINTED) WITH A QUICK SWITCH IN THE MARKET DIRECTION.

>>>> 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

I AM AMAZED AT HOW FEW DOWN DAYS  the Nasdaq has in the last 20 trading days!

What Ilike best about the current MARKET FACTORS, COUNTS & RATINGS table below is the number of Accumulation days (5) still (slightly) out runs the 4 distribution days in the last 20 trading days.

That ratio gives me a good sense of the strength and direction of the current market. If the recent move of 6 UP days and 3 DOWN days confuses you, note that I do not count a day’s move unless it was at least 0.2% up or down.

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 onwhat the market is doing then.

If you can’t stand the market dropping, it is OK to sell your holdings abd wait in CASH.

>>>>>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 yet seeing the market slowing down.

>>>>>>>>>>>>>>>>>>>>>>>>> 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!  

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 andthe volume rose, indicated some serious selling.

>>>>>FINALLY: REMEMBER:

In the stock market,…

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

Look below at the amazing percentage of stocks that have “A” or “B” ratings – Even after adrop from recent A+B s owning 68%.... today’s 55% As+Bs is still pleasantly strong.!!!

Monday’s  Accumulation/Distribution table:

(Please ignor the odd color of the 2/12 "A" box. My mistake. Just think of it as a nice rising day.

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

Green boxes above indicate ratings that have risen over thelast week.

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Please consider reviewing this newsletter daily: .The markets can change direction and strength quickly! Note that the percentage of As and Bs took hit over the last 4 weeks – a drop from 61% fourweeks ago to 52% 2 WEEKS AGO TO 58% LAST WEEK on this week!>>>>>  A small drop !

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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)

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 risingwell after one or two small down days. But if you had a significant loss overseveral days, especially if there is an increase in market distribution days(down days on higher volume), then stepping out and waiting in cash canhelp you save your portfolio for future rallies and let you sleep at night.

REMEMBER:_____EVEN IF CASH IS A VALID POSITION,…in a fastrising market, you should VISIT your portfolio to verify it (or a big part ofit) is not dropping.

>>>> Stay tuned for Friday’s results!

One additional “Word to the Wise”…

>>>>>--- MOST MARKETS FALL FASTERTHAN THEY RISE. Beware of buying any new positions unless they are veryhealthy.

Wishing you big returns in your portfolio!.

I APPRECIATE YOUR CONTRIBUTIONS FOR SUPPORTING THIS NEWSLETTER.  

I USUALLY SPEND  MORE THAN 4 HOURS FOR EACH ARMCHAIRINVESTOR NEWSLETTER:

·      RESEARCHING THE IDEASIN THIS NEWSLETTER,

·      CALCULATING ALL THEDATA I NEED,

·      WRITING THE TEXT FORTHE NEWSLETTER AND….

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

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

Thank you for your kind feedback  and ESPECIALLY FOR YOU WHO HAVE DECIDED TOMAKE A MONTHY CONTRIBUTION.

Charlotte Hudgin, The Armchair Investor

May your stock portfolio grow and grow and grow!  

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