Again and again, my nifty-50 stock list moves from oversold to overbought and back again to oversold like an ever spinning wheel within the market’s spinning wheel…
And each time there are 40 or more of the 50 stocks on sells, it’s time to sit up and take notice since that is the number that most often signals either the bottom or the beginning of a bottom on each down swing.
I first posted about this strategy in November of 2015 on another forum.
Nothing has changed since then.
Usually it just takes one day of 40 sells, sometimes two days, to set up the bottom of a swing. Should be noted if it goes more than two days that’s is a warning that something bigger may be in the offing (last time that happened was the start of the Covid-19 bear plunge this year).
This is just an FYI since the signal is once again close by.
This is what market timing and swing trading are all about.
The results can be quite remarkable, in leveraged ETFs like TQQQ, TNA, leveraged sector ETFs like SOXL, FNGU, and, of course, hot individual stocks.
The last time this buy signal triggered was on the open of September 9th, about six weeks ago, thirty-two trading days (see the TQQQ chart with this article).
Since then, in the general market, TQQQ (the 3-x leveraged Nasdaq ETF) peaked at up; 20% and is still, despite the market’s current weakness, up 7.7%; TNA (the Russell small-cap leveraged ETF) peaked at up 26.2% and is still up 22.1%.
Leveraged sector ETFs of note include semiconductors, SOXL peaked at up 42.4%, still at 31.3%; biotechs, LABU peaked at up 54.3%, still up 34.2%.
And finally, hot stocks: ZM, still up 42.%; TSLA still up 20.7%; ROKU up 34.4%; and two of my favorites, BLNK up 33.6% and NIO, still up 55.6% (see the NIO chart).
The buy signal is the open of the first day after the Nifty50StockList ceases to have 40 or more stocks on sells. Stops are at whatever price level on whatever is bought based on each trader’s risk tolerance.
On the chart he 40-plus sell days are marked with purple paint bars.