Passive   Investing   With   $QQQ

"Write down exactly how you want to see your world, and visualize it. You have power in your thoughts. "

Bob Proctor (Expert in Law of Attraction)

"Freedom to be your best means nothing unless you're willing to do your best".

Colin Powell (Secretary of State)

We are experiencing a very successful  "Follow Thru"  day  that we had with the  $SPY  on April 2nd, followed by another one with the  $NASDAQ  on April 6th.  March was a horrible month.  We were bombarded with the news in the media about the pandemic.  If you paid attention to the news, you would have thought that the world was coming to an end.  Those that distanced themselves from interacting on social media with every post on the pandemic, were most likely alert when the market took a hold within 10 days of reaching an all time low on March 23rd.  We were all under lock down at that time and afraid to step out the door.  Market in the mean time was flashing an opportunity for the retail traders to start stepping in gradually in the market.

Did you miss this opportunity ?

Fast forward 10 days from the low of March 23rd and suddenly we had a successful rally attempt by the 2 indexes - $SPY  and $NASDAQ.  Lot of retail investors were caught off guard and couldn't believe that the market was taking off again.  Leading growth stock index  $QQQ  had fallen off almost  -35% (1% on an average every day for 35 days).  This was a fast and furious waterfall decline of these 2 indexes.  Lot of investors doubted the  "Follow Thru"  day  - including myself.  Mr. William O'Neil (Founder of Investors Business Daily) has a rule which says:

You must buy something on a Follow Thru day  

When in doubt, it would be a good idea to perhaps start out with a passive investment style of investing in  $QQQ  on  "Follow Thru"  day.  It's a simple strategy as explained below:

• Invest in  $QQQ  at market open the very next day that IBD (Investor's Business Daily) declares a  "Follow Thru"  day.
• Reduce it to 1/2 position when IBD declares  'Market Under Pressure'
• Close out the entire position when IBD declares  'Market in Correction'

 This strategy is explained in details on page  A14  of the current May 4th  edition of IBD print and digital newspaper. 

If You had followed this strategy, the performance results to date from the  April 3rd are:

1. $SPY    ... +12.77% (General Market Performance)
2. $QQQ   ... +12.99% (Growth Stock Index Performance)
3. $XLK    ... +13.98% (Leading Sector Performance)

Stocks   worth   Monitoring

April maintained it's reputation as being the best month traditionally, looking over the historical pattern of the stock market.  May through October are the worst 6 month period in the stock market.  Currently the 2 indexes - $SPY  and  $QQQ  are hovering along the 10 day sma (simple moving average).  It's a good sign that these 2 indexes are consolidating for the last 2 weeks.  We had  2  'distribution days'  on Friday  when both these indexes gapped down over  -2.5%.  $XLY (Consumer discretionary sector) was the one that took the hit with  $AMZN  dropping  -7.64%  and  $GM  dropping  -6.2%.  We will have to see what the market does this coming week.  It's a good idea to be cautious at this time.  Harvest partial profits if the stock has attained gains of over  +25%  from positions taken during the  'Follow Thru'  day.

Following 9 stocks (from the list of 19 stocks that I had on My Watch List posted on March 29th bog post) are consolidating their gains and forming new bases.  They may provide an opportunity for an entry if the market continues to maintain its bullish momentum.  I have indicated their performance to date in parenthesis when market was declared as   'Confirmed Uptrend'  in early April.

1. $DOCU   ...+22.36%
2. $DXCM   ...+30.11%
3. $MSCI    ...+13.03%
4. $NEM     ...+26.68%
5. $NFLX   ...+15.49%
6. $NVDA   ...+11.55%
7. $TEAM   ...+20.63%
8. $MRNA   ...+46.27%
9. $RCUS   ...+72.96%

Average performance of the 9 stocks  +28.78%

These 9 stocks are some of the leading stocks and they have Out Performed the Leading Growth Stock index  $QQQ  by  +122%.  It's critical that stop loss be placed to give these stocks some breathing room to consolidate but also to allow you the opportunity to add to the position once they form a proper base.

Good luck with your trading this week.

Amin