A swing trader with a bit of day trading for education and profit
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Yep, going to be a long one. Enjoy
Good comments. Not sure I would have predicted a double top, but if you are in that business, go with it. Good eye to notice VIX drop.
It is stalling along with most everything else. I have a 50% stop set.
I had forgotten about them. Since I am only investing 1%, it would not make a whole lot of difference.
Thanks
I have NVDA and I am not particularly worried. All the analysis see upside for the stock. Problem is it doesn't take much negative to disappoint. I'm holding.
I think it is no secret that I am somewhat afraid of this market. Technically it looks to me like it is on the edge of a major w3 breakdown. But I would expect it to take at least a week or more for the major w2 to finish. It appears to me we are in a sub wave 5 that will finish the major w2.
With that as a backdrop, I saw this chart this morning. It is the Electron Year performance since 1950. It is saying the last half of Sept and all of Oct are weak periods. This lines up exactly with what seems to be coming to me.
Just watch the charts and react as usual. No reason to panic. Just another typical pb according to the chart, but I think this one could be much more severe.
Fidelity is already starting to assure investors that these little drops are just part of investing. We will see how that works out.
Fidelity Viewpoints
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1. Worrying that every market stumble is the start of a crash
Sudden market pullbacks are always unnerving. And investors who are already anxious about stocks might see every market stumble—such as the ones experienced in April, July, and August of this year—as the potential start of a major downturn.
But the truth is these temporary setbacks are actually routine occurrences in the stock market. “Markets don’t go up in a straight line,” says Denise Chisholm, director of quantitative market strategy for Fidelity. “Market corrections and steep pullbacks always feel like a panic. But in fact they’re very common.” Just as a mountain climber needs the occasional break to refresh, the market sometimes needs to take a breather and regroup before it continues its march.
Oftentimes, these pauses or temporary declines signal that the market is processing new information and that investors are recalibrating their expectations. Far from always being bearish signs, sometimes these dips can indicate that the market is coming into better balance. (Read more about why the recent pullback may have actually created opportunity potential.)
2. Avoiding the stock market because it’s gone up
Even after the market’s recent pullback, US stocks have had a strong year so far. Given the series of new all-time highs it’s made in the past few months, many investors may be wondering if it’s time to get out, not in.
“After seeing the stock market rise quite a bit, many investors start to wonder whether or not this may continue,” says Naveen Malwal, institutional portfolio manager with Strategic Advisers, LLC, the investment manager for many of Fidelity’s managed accounts. “Hearing that the market has made an all-time high may even make some investors nervous enough that they avoid investing more or even cash in some of their winners.”
Part of the concern may stem from misunderstandings of market history. When investors and analysts describe past market cycles, they often note that the market made a new all-time high before declining, with the all-time high marking the end of a bull market and the start of a bear market.
But this can lead to a misconception that any all-time high will precede a pullback. “If you look back historically, the market making an all-time high is a very common occurrence,” says Malwal. Bull markets have often spanned multi-year periods when the market has made one all-time high after another. Investors who took every all-time high as a sell signal would have missed out on substantial gains.
“It’s not true that whenever the market has made an all-time high, a correction has come around the corner,” says Malwal. “More often, the market has continued to rise.”
3. Focusing too much on a narrow group of stocks
The recent bull market has been unusually concentrated, with only a few stocks accounting for an outsized portion of the market’s returns since 2022.
This kind of market dynamic can be a recipe for investor distress. Investors who missed the ride can get hung up on regrets. “Many of us end up kicking ourselves for not having invested more in a space that has done remarkably well,” says Malwal. Investors who caught the wave may see their portfolios grow increasingly concentrated, and face the fraught decision of whether or when to sell.
But ultimately, trying to make big bets on small groups of stocks may be very risky, and leave an investor vulnerable to a correction. Instead of fixating on recent big movers, focus on formulating a sensible and well-rounded plan for the future.
“Rather than trying to guess what’s going to be the next big thing, what we have found helps investors more over the long run is to diversify and invest across a whole host of investments,” says Malwal. “Investors who are diversified may not experience so much of the booms or busts that might occur with a narrower set of investments, so they tend to have an easier time sticking with their plan, and they historically have experienced healthy growth.”
4. Holding too much in CDs and other short-term investments
Short-term CDs and Treasurys have come into favor among many investors in the past 2 years as rates have risen. Many investors feel comfortable in these investments due to their low risk of default and predictable cash flows.
“There are many wonderful features of short-term investments,” says Malwal. “But investors with a long-term outlook have historically often been better off in stocks.”
The key challenge with short-term investments is a lack of stronger growth potential. “While it’s true that stocks may be more volatile than short-term investments or bonds in the near term, over the long run stocks have provided much higher returns,” says Malwal. Although rates on these investments may appear attractive, they may not be providing much growth after accounting for inflation. Moreover, with rates potentially poised to fall if or when the Federal Reserve starts cutting rates, staying in short-term positions could leave investors exposed to reinvestment risk.
Says Malwal, “Investors who have time on their side can typically benefit from having a broader exposure to stocks and bonds, or a combination of the 2, as opposed to staying in short-term investments for a long time.”
5. Not factoring taxes into investing decisions
Investors often think of their brokerage accounts as accounts they should use for trading stocks or pursuing their latest ideas. But because brokerage accounts are not tax-deferred, Malwal says this can lead to one of the top mistakes he sees: generating a bigger tax bill than necessary.
Actions like trading a lot and holding tax-inefficient investments can increase investors’ tax bills. “Generally speaking, in taxable accounts, investing tax-efficiently and making gradual changes may help investors keep more of what they earn before taxes,” he says. Simple actions like choosing a mutual fund that trades less or keeping in mind the potential benefits of lower long-term capital gains tax rates may help investors keep more of what they potentially earn.
6. Letting the perfect be the enemy of the good
Analysis paralysis can be a problem for any investor.
Even if you’ve come up with a solid investing plan, it can be easy to get hung up on “what if” questions. What if I’m missing out on an even better investment option? What if the market crashes tomorrow? What if my plan just doesn’t work out?
The reality is that investing is inherently uncertain. Even the most experienced investors can only work off estimates, not certainties. While investors might worry about the “right” answer to any given investing question—like what investment to buy or when to get into the market—the fact is there may be a range of reasonable solutions.
But one thing has been true time and again historically: Over long periods, investors have done better by being in the market than being out of the market. If you’ve got a well-rounded, suitable plan that’s sensitive to your financial needs, then don’t let hangups about the perfect investment or the perfect time derail you from your goals.
7. Focusing too much on news headlines and politics
There’s no shortage of worries or risks in the world right now.
Malwal says he sees many investors staying out of the market in the hopes that the landscape will look more stable at some future time. “Some investors feel like they should wait because there’s an election happening. Or maybe they want to wait until their candidate is in the Oval Office, or until Congress is favoring their preferred issues,” he says. Others may worry about the tense state of global affairs, or risks to the economy.
Rather than using news headlines or gut feeling as indicators on the market, Malwal suggests investors go deeper into the economic data that actually helps drive the stock market—like corporate earnings, economic growth, stock valuations, and consumer spending. This data may not paint as sensational a picture as news headlines, but may be a better guide to market potential. (Read more about the “vibecession,” or why investors may feel the economy is weaker than it is.)
After all, the world has always been perilous. “It’s very rare for me to sit back and think, ‘There’s nothing to worry about right now,’” says Malwal. And yet, through decades of uncertainty and challenging news headlines, the market has still made big strides.
Put your investing ideas to work
I have no fear of a crash, in fact, I embrace one. This last -14% reset on QQQ enabled me to make great gains against the market. I was in cash for most of the drop, so I loved every day seeing the market drop. I knew it was just going to be better for me.
Our economy has been macro managed for way too long and propped up with trillions pumped into the market. We need a reset in my opinion.
I think yday could easily be w4 for this cycle up which is just a subset of a larger weekly wave 2 up. QQQ has retraced over 62% of the drop from the ATH, so it qualifies as a w2 easily. If this is all true, a nasty w3 down is coming after this final push up. Buckle up.
Simple, the articles says it all. Eventually they had to come clean.
Back in March, when most of Wall Street and economists still believed the lies spewed forth by the Biden Bureau of Labor Statistics, which intentionally uses inaccurate, rushed "data" from the Establishment survey which is meant to pad sentiment and make the economy appear far stronger than it is for propaganda purposes (as one can see by the constant monthly downward revisions),
I've been so busy I haven't had time to look at the detail, although I knew account was up nicely.
Got to remember that the first 4 positions are 3x, so need to divide by 3 for comparison to others, but NAIL up 2.8% 1x is truly impressive. Pulling back a bit now.
Like you said, META looking good also, but so is SNOW AMZN NVDA and COST.
NFLX has had an amazing run up 10.7% as of last night, so it can take a rest.
Here is a good example of what used to trip me up a lot on 60min chart. Without a doubt, MACD is my favorite indicator. But it too me a long time to understand what a momentum oscillator really was. As you can see on the chart, prices have continued to move up, but MACD is falling. It is not falling because prices are going down, it is falling because momentum is. For sure by the time the MACD line crosses zero, that downward momentum will be seen in actual price falling.
MACD is still my favorite indicator, especially now that I know how to read it better.
I joined iHub in Aug of 2005, so this month is my 19th year anniversary. During that year I watched a movie called Duma with one of my grandkids about an orphaned cheetah who becomes the best friend and pet of a young boy living in South Africa. I thought the animal was beautiful and I too wanted to be fast and cunning with my trading as a cheetah is with his hunting, so I choose the name DUMA for my screen name.
The board I joined was “ETF Swing & Day Trading.” There were many more posters than and the board had big problems with posters bullying other posters. I eventually became moderator and took a hard line against this type of activity. I banned several posters who would not change their behavior.
By 2013 I had finally started to figure things out and became very dedicated to cycle trading. Most of the trading on the board was just day trading, so I decided to start a separate board (this one) just for cycle trading. As it turned out all the posters followed me to this board and I eventually realized that even day trading was a from of cycle trading. I moved from mainly 60min trading to daily and saw a big improvement in my trading.
When I started this new board, I wrote an “Introduction” to explain my rules for posting on this board (you might like to read them).
Also in the introduction I explained each phase of a Full Cycle Trade. I sometimes refer to Mark Down, but usually not the others, although they are in my head for sure. Of course not all cycles follow this exactly. QQQ is currently in the Distribution Phase, but it is soon going to be back into Mark Up. Basic rule is don’t be long during Mark Down (until it turns) and always be long in Mark Up. Distribution is the phase that is a bitch to trade. I have not edited the Introduction since 2014.
I remember having this discussion before that you were a mechanical engineer. We had a whole department of ME's at Motorola to design all the things we needed for the wafer fab. I was always so impressed with the stuff they came up with.
Nothing like a stock market crash to open ones eyes to B&H faults. But like I said, luckily not everyone does it because the market could not tolerate it.
My Big 3 holding had gotten up to 138% invested against my initial buys at 125%. I decided yday to rebalance SPXL and TQQQ back to original buy levels. I sold 8.8% of SPXL and 10.3% of TQQQ. Left FNGU alone which was only 1% high. So now I am at 126% investment. My non-IRA account has the FNGU stocks, so it is 14% higher. I slept better last night, but it could have been the wine, lol.
Here is a little something I threw together I thought might help explain the 3x effect.
This analysis assumes a $10,000 investment at 100% (this is money at risk) using QQQ and TQQQ. The prices are actual.
Since QQQ is a 1x fund, all the money needs to be invested resulting in a gain of 6.62% and an ending investment of 100% same as starting.
But for TQQQ the numbers are very different. The starting investment only needs to be $3,333 to have the same risk since it is a 3 fund. Gain is slightly better but look at what the at-risk number went to $12,034. That means investment rose to 112.7%.
If you wanted to rebalance back to a 100% investment you would need to sell 9.33 of the shares. If you let it ride, the gain difference between the two will just continue to increase as long as prices are going up.
No I was an electrical engineer, but from the time I was in Jr High, I have always worked with numbers to try and figure how to make money. I have become quite proficient with excel. When we got our first HP lab computer way back when, I stayed after hours to learn how to program. The first program I wrote was to calculate the effect of different interest rates vs time. I still have that print out.
I actually spent all night thinking about the numbers I saw yday and how in the world could my account actually beat both SPY and QQQ gains.
The numbers below are directly from my IRA account where I only invest in my Big 3. Yday the account was up 1.6% beating both SPY and QQQ. How can that be? The answer is leverage. As I entered my positions I started as you can see at 60% 55% and 10%. But the 3x effect has continued to increase my investment level.
So I started yday with a 135.8% investment which gave me the great gain. Good going up, but bad going down. So I have been working on a plan that as the market starts to reach its top, I will start to pull back on my investment to 100% before any real damage is done.
Just to make sure you understand the math. If I take the investment level for any etf at the start of a day (previous close) and multiply it by the gain for the day, the number I get will be the effect on the overall NAV.
As an example. If I am 50% long SPY and SPY gains 1%, NAV will go up .5%. If I am also 50% long QQQ and it goes up 1.5%, that will add .75% to NAV. So NAV gain for the day will be .5%+.75%=1.25%.
On the far right you can see that this cycle has given a gain of 6.3%. The account is actually up 6.8% because of compounding on top of previous gains and also MMF gains.
I put some investment numbers to it all so that you could see how the dollars worked out.
I am assuming a $1,000 equavilent investment for each stock and a $10,000 investment for FNGU. The actual investment numbers are pretty different, but the risk is about the same. As an example, the $3,333 investment for FNGU has the same risk as a $10,000 investment since it is a 3x fund.
So the stocks currently have a gain of $846 and FNGU $453, which is 87% higher than the FNGU profit. The amount at risk for the stocks as of today is $14,000 and FNGU is $10,000. I don't base my profit on amount that was invested but rather the amount that was a risk in the investment.
I bought my SPXL in 2 equal $ buys, but TQQ and FNGU in one buy. Allocation is 60% 55% and 10%. The FNGU buy was late by a day, but until I got a close above 10ema, I was not going to buy. So I am doing well because the SPXL and TQQQ buys were before any really big move and they are by far most of my holdings.
With this type of a headline, I don't think this is over at all. All the last comers have got to get on the wagon. So hang on for what could be a very good ride.
"Unprecedented Swing": CTAs To Buy $86BN In Global Stocks This Week, The Most On Record
Here is something scary. On top of the 10% FNGU, I also now own 14% more of FNGU stocks and a couple others. I already owned 7 stocks before I ever got a buy signal for FNGU. As of the close today, my stock $ gain is 95% higher than my FNGU $gain. Granted I now have a higher investment in the stocks, buy that will only be going forward. Getting in early is always best, but of course it has to be weight against risk.
IS labor day first of SEP...? Monday Sept 2 is trading holiday.
I enjoy putting things into words to really get me to focus. Many times I start writing about something and I am sometimes a bit surprised with the conclusion I come to by the end.
Glad it was helpful to you also.
will do
I saw this 14-year gain comparison today and really like what I saw. I summarized what I think were some key investment vehicles.
First of all, gold and emerging market are a total waste. But I would bet you about any amount of money that anyone with a managed portfolio will have emerging markets in there for "diversification". I know, I been there.
REIT and IWM have about the same yield but lag far behind SPY and QQQ. No reason for me to invest there either. But again "diversification" they will say is important.
And finally the real key. SPY QQQ and IWF(Lg Growth). I expect that IWF has most of the Mag 7. This is the age of high tech and large company. If you are not big and I mean BIG, you will be lucky to survive. Today's list of closures included Dollar Tree (1000 stores), Rite Aid (780), and Conn's (170). Subway just called an emergency meeting with all its franchises. The $5 Value Meals from McD and others is killing them.
The absolute winner is QQQ at 836%. $10,000 would have turned into almost $100,000. That is a serious gain, it even beats inflation, lol.
So my strategy as I discussed many times is to invest in SPY and QQQ. I throw in a little FNGU for fun. SPY is the index I am trying to beat, so I do invest in it for stability. It will not dive like QQQ on a bad day nor will it soar like QQQ on a good day, like today. But that is okay, I have plenty of QQQ to juice up my gains and if I do a good job, then I can expect a gain somewhere between SPY and QQQ like IWF at 600%. I am happy with that for sure.
This time around I bumped up the high tech holding. My mix is 44% to SPY and 56% to QQQ, FNGU, and FNGU stocks.
Laugh, yes all the way to the bank. I'm not sure anything could have stopped the market this morning. This surge has been building for about a week.
I just did a quick scan of my positions
SPXL 3.2% 1.1% 1x
TQQQ 5.3% 1.7% 1x
FNGU 5.6% 1.9% 1x
AMD 2.3%
AMZN 2.9%
META 1.6%
NVDA 1.7%
SOXL 8.3% 2.8% 1x
Good case in point. Retail sales could have been good or bad depending on what the government wanted it to say. Could have waited to get fully loaded and that would have been prudent and from the gut feeling. But feelings will not make you money, rules will. I was 0% invested EOD last Tues, Wed and Thur I bought 3 FNGU stocks and was 3.6% invested. Friday 30%, Mon 71%, Tues 139%, and Wed 142%.
So this morning could have been really bad, but I was prepared for that. But instead, this is starting out to be one of top $ days of the year, if not the top. A long way to close, but I think momentum is finally taking hold.
I posted this chart on the 12th (Mon) with this caption, "Market just continues to melt up a little day by day. QQQ seems to be heading for a buy." I went all in TQQQ that day.
You can see that by the 12th we had had 3 basically flat days coiling up the market to strike and kickoff wave 3 officially. Look at what happened, we gapped up the 13th 1.0% and now the second wave 3 gap this morning at 1.3%. Wave 3's will make you some serious coin.
Add to that, look at what NDXBP has been doing. It bottomed at 30% on the 6th. Rose to 46% by the 12th (D-day or action day), and since has gapped up 5 times to this morning it is sitting at 62%. That is not just the Mag 7, that is a market.
The beauty of only investing in my Big 3 and actually just SPY and QQQ is enough is that I can go from 0% invested to 100%+ with two clicks. Nobody trading from a selection of stocks or etf's will ever be able to do that. For 6months I had probable one of the best money managers running a major portion of my account. He never lost me money, but he couldn't match the market because he was never 100% invested. The market is a major force to reckon with. Very very few can match it or beat it.
https://www.zerohedge.com/personal-finance/us-retail-sales-beat-thanks-yet-another-massive-downward-revision
Keep your rules on top of the table, turn off the TV and trade with blinders on. It is working for me.
Absolutely not except for maybe what I did this morning, not made trades into a major coming report. I don't guess where the market is going at all. My wife is doing that and she has been in cash all year waiting for a crash, while I have made good returns.
Speaking of this morning, I was waiting for the CPI report before acting on buying AMZM GOOGL and TSLA. Bought AMZN and it is down just a little, -.2%, but GOOGL and TSLA are getting killed. Good move on my part. It turns out it wasn't CPI that affected them, I was just lucky with my timing.
Yes I held off making a few more buys until I see the effect of CPI report on them.
But today was a great day. My large account came within .1% of matching SPY for the day even though I was only 71% invested this morning. Strong QQQ day did it.
My Small Aggressive account was 200% QQQ so, I was up 5% for the day. Love it.
So what are you trying to say.
I made a lot of buys AH. When I was all done buying I had to sell SGOV to cover.
SGOV closed at 100.48, but I sold for 100.47 AH. I could have sold at 100.48 MOC, but I didn't know how much money I needed until I made my buys.
However, SGOV was up .02 for the day, so I still made money on the shares sold.
I am a happy camper. I had 99.6% of my account in SGOV 8/2-8/8. As of now I am down to 47.2% and fully invested with stocks/etf's, so half of my account is still earning short term interest. Love 3x funds.