Market rally does not need a rest; QSII and a few others break-out to all-time highs


The media pundits claim the market needs to rest.   The market gets tired and needs to consolidate for a while–such utter nonsense! I wrote a few posts ago that the rebound in the indexes thus far is actually quite small, compared with the rebounds in the 30’s.   The Dow is   up only about 24% from the bottom, compared with about 100% snap backs from the bottoms in the 30’s.   The QQQQ is only in the 22nd day of its up-trend.   The up-trend that ended July 27, 2007,   lasted 80 days!   The current rally may have a lot longer to go.

Meanwhile, by following the market’s up-trend and the GMI , my account is now in   the black for the year and I am now working off the 5% loss from the prior year.   How am I doing it?   Just by buying the types of stocks that I list to the right of my post each day.   Long positions in stocks like AAPL, GMCR and NFLX have helped, along with some call options on QLD.   Now that so many stocks are in up-trends I am also writing cash secured puts in my IRA on stocks I hope never   to own.   I will write more about this interesting technique in a later post.

The GMI is pretty strong, now at 5 (of 6). gmi0417 The last component we will need to turn positive for the GMI to turn 6 is for there to be at least 100 stocks at 52 week highs in one day.   This may take a while, since there were no more than 15 new highs on any day last week.   The Worden T2108 is at 92%, as high a reading as it ever gets.   This does not mean that the market is overbought and must decline, only that it is rebounding from deeply oversold territory.

The fact that few stocks are at their 52 week highs makes these winners stand out.   And the few that are also at all-time highs are even more extraordinary. Nicolas Darvas used to write that he liked to buy stocks that were at their highest levels ever.   These were rockets in which everyone who owned them had a profit.   That is why I like, and own,   QSII.  qsii This stock was a 40 bagger from 1999-2006, then formed a three year base.   QSII recently broke from that base to a new high on increased volume, as shown in this monthly chart from TC2007.   When a stock breaks from a multi-year base to an all-time high, I become interested.   QSII also was on the IBD New America list, and is on the IBD100 list, and therefore has strong fundamentals.   There are a few other stocks breaking to all-time highs, including GMCR, HGG, SNDA, ALGT,TNDM,NTES, ARST,NFLX,ORLY and AZO. These stocks are among the new market leaders to keep our eyes on.

4 thoughts on “Market rally does not need a rest; QSII and a few others break-out to all-time highs”

  1. Dr. Wish, you now say that this rally has a long way to go!!! But in Feb-Mar you were saying that this is a “short rally on a long-term down-trend market”!! Did you change your mind?

  2. ALGT has not formed a perfect cup-handle. Rather, it has formed a perfect LADDLE with the handle at $40, and it’s still going up since my last pithy posting here. Now, what is the strategy of when to SELL on this one? Any thoughts?

  3. The QQQQ is still in a short term up-trend within a longer down-trend, that may be turning up. It always takes a few months for the longer term average to turn up, but the QQQQ is now above that average so the up turn may be beginning. I am getting ready to start putting my university pension funds back in the market–in stages.

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