Armchair Investor Newsletter 2023-12-04M UPTREND Day 22. Market quiet today TQQQ is UP 148.4% this year!

Armchair Investor Newsletter  2023-12-04M UPTREND Day 22. Market quiet today TQQQ is UP 148.4% this year!

Monday was mostly a moderately quiet day….. But add it to the previous the 7 days of which 6 days were down or very weak rises and I am concerned that the market may have hit a high. The market could still be shrinking from the amazing 19 day rise of which 6 of the last 8days were down days! And this recent high dropped 5 of the last 7 days. I know not every Uptrending period rises every day. But I feel like I’ve received a paddling for being bad – and I can’t figure out what I did wrong. I guess “they” are right….

Sometimes the market rises and sometimes it falls.

After that happens, we can make up a story about “Why?” it happened. But the best lesson is…. Sometimes the market rises and sometimes it falls.

And it is our responsibility to not let the “falls” eat too much of our gains. Cash is always a safe position when the market is falling.

Here were the final numbers from the major indexes:

The poor DJIA just can’t seem to get ahead…

So let’s get caught up on the most important year-to-date results to me and most of you individual investors…. The Triple QQQ (TQQQ).

Yippee yoh kie ai! Although I was NOT in the TQQQ all if this year, I have made enough of it to fund a great Christmas trip to visit my brother and family … with some of his kids I have never met.  It will be a frenetic event! And “Go with the flow1” will be my mantra.

On with the QQQs.  

In case you missed my look at the last 4 years of the Pandemic and its impact on the market….. (yes… We really have been fighting the COVID pandemic that long!)

TO LOOK AT THE IMPACT OF THE COVID PANDEMIC, LET’S START at the beginning of the second half of 2019. The world knew of COVID, but was not especially concerned about it. We know this because the QQQ kept rising through the October quarter,then January and though February 2020.

Then…..WHAM! COVID hit us! Look at the trader’s reaction!

FYI:Last Friday’s newsletter had a 4 year history of the QQQ from just before the COVID Pandemic hit, to yesterday.

If you read this part of the newsletter over the weekend, nothing has changed and feel free to skip to the next section of the newsletter

FIRST COVID SCARE: In the last quarter of 2019 and the first 6 weeks of 2020, the market continued its Uptrend, moving higher at am impressive pace. Until COVID became real! And over that weekend:

·       the QQQ dropped 3.6% in March of 2020.The world suddenly knew a pandemic was a high probability.

·       Over the 4 weeks, the QQQ increased the “COVID” dropped 48.0%! Yes, many people were losing a lot of money.

·       But strangely, almost as fast as it fell, the QQQ got back on its horse and rode it back up. The first recovery took a little more than 10 weeks. I don’t know how you reacted to the recovery,but I was thrilled.

o   What caused the fast recovery? As usual, the crowd’s actions.

o   Many investors had sold much of their portfolio, running to the safety of CASH. But what were they to do with all that cash? As soon as they saw the 8.8% rise the next week, the conversation among sophisticated investors shifted to, “What can I invest in to catch the new Uptrend?”

After a one-week hesitation to see if the market would hold, the money started pouring in again. And there was a lot of it. Many of the people who were laid off in the 4 falling weeks, saw the market rise and bought what they rightly thought was catching a tiger by its tail.

o   And the more the market rose, the more cash came flooding in. Plus some investors bought stocks that had taken off and they sold them at their higher prices. Then the investors repositioned the cash in the next “hot” stock.

o   In the final quarter of 2021, the market had a 4 week sideways rise which was stuck on the 2022 high.

The market fell hard for the next 9 months pf 2022, spending the last quarter rising its 50-day line.

Since the end of the 2022, the QQQ made an impressive rebound through last Friday when it is closed at 388.94, just 3.4% below the 2022 high.

Whew!  Now you are up to date wit. The lighter holiday volume over the l=few weeks is not a disappointment to me.  Holidays are frequently quiet times,especially when the traders have gone through the wild ride of the last 4years.

AN ENCOURAGING THOUGHT:

The last5 weeks were all rising weeks and the QQQ is jut . Will this market continue higher, to break through to a new high? Looking back, I see a high of 403.43 on November 22, 2021.  Good news: the QQQ is just 0.3% below that high.

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.

So where are we today? I hope you have followed this newsletter and made the triple digit returns we have shared with you.  

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 stocks with “A” and ”B” ratings has risen from 28% of the stocks 4 weeks ago, to 60%over the last 4 weeks. Wow! (It was 58% last week.)

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 below 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. The count of “A” plus “B” rated stocks is shooting higher!

You can find these ratings in Investors.com.‍ 

Wow! Look at the consistency of the ratings growth –

·       Columns A and B simply grew stronger every week while…

·       Columns C, D, and E got softer every week.

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.

On the 20-day history of the Nasdaq’s daily prices below,  where are today?  Yes, the Nasdaq is at a 7- quarter high, …. Just off 2022’s last quarter’s high.

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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 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 TUESDAY,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….FORMATTING THE NEWSLETTER.

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

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Charlotte Hudgin

The ArmchairInvestor

CharlotteDH100@mail.com