A recent guest on IBD live discussed how she trades the TQQQ.
General Discussion
She does not like to disclose her position sizing because she has an “iron stomach” and can handle to volatility. But she says if there is an FTD and she does not have any stocks to buy, she will go 100% on TQQQ
When she does start to find attractive stocks to buy, she will sell down TQQQ to fund them.
If there has not been an FTD, she will look for those 3 higher highs and higher lows, but go in at a lower level: 25%, 50%, 75% depending on how strong those 3 days look. What is the vol, how is the rest of the market doing, how big was the previous decline.
You have to have a high level of commitment because triple-leverage can hurt you really bad.
She has looked at this every single day since the TQQQ came out about 15 years ago.
When she sells, it is usually in increments as she hits each sell signal/flag.
Only two Buy Rules:
On a Follow through day
3 days of higher highs and higher lows. (At least initiate a position)
Sell Rules and Flags (a number of signs of weakness or change add up to incremental sells)
When it hits a new 52 week high, watch closely. Does it start to pull back or maybe form a handle.
When it makes a new high in declining volume, pay attention.
Watch market distribution days. After 4-5 she will act more aggressively to sell as it pulls down.
3 consecutive down days.
If it gives up the 10 day in rising volume. (Short term trigger)
3 consecutive down days in rising volume with lower lows and lower highs.
When it has reached a recent high and then it tries to take that out but gets rejected 3 times, then that is a sign of weakness.
Bulls vs Bears, 3 items to watch (0BULL on MarketSurge). Over 60% bulls, new 52 week high, new high in declining volume.
Usually does not wait for it to get to the 50dma to get all out. Right now (in this market??) she would probably let it get down to the 21dma before exiting totally.
Example: Recent 3-days of higher highs and higher lows seen in Sept 2024 on the QQQ chart.
I watched her live on that episode and I’d stress one aspect of her approach. Her sell rules may be fairly well defined but her implementation of them is a bit more nebulous. If I remember correctly, she sort of referred to them as “alerts” or warning signs and not hard and fast. She doesn’t always immediately sell based on a single sell rule occurring. Yes, as you noted, she scales out but may not make any sell until a couple rules have triggered. She is a bit of an instinctive trader in that regard.
They pushed her on her total position today, not sure it’s in this clip, but she is currently about 75% vested.
Ironically, in your first introduction post Pete, I put in a link to her podcast with Traderlion. He’s an IBD nerd (said with all respect ). If I remember correctly, she goes into some more depth with the origin and use of her trading plan/style.
The other comment she made, that may or may not be in the clip, was that she generally trades in the last 30-60 minutes of the trading day. Wanted to write in a question as to if she goes with the anticipated close and buys that day or waits. Got side-tracked. A lot can happen in 30 minutes.
Today’s Live had a discussion on High Tight Flags. If I can get some time I’ll try to draft some notes. The problem is that Mike made the comment that there’s O’Neils criteria and then “others” and Mike is in the others group. But he did make a quick comment on what I have always believed is key to all patterns, it’s not always the specific parameters but what they imply. There is a surge in support followed by a breather without significant erosion in belief in the equity. You need to look towards the group psychology like in candles.
So the discussion on high tight flags was not as in depth as implied by IBD advertising. It was prompted by the guest Leif Soreide the 2019 US Investing Champion who was the Friday guest panelist. He asked, or an audience member, asked for Mike Weber’s take on a stock and if it was in a HTF.
Mike stated “There’s the Bill O’Neil version of the high tight flag, and then there’s the other camp. I’m in the other camp.” O’Neil had hard and fast rules that focused on the flag pole had to be at least a 100% increase. 99% was not an HTF for O’Neil. Mike commented that the discussion (argument) to define where a flag pole even started (which obviously dictates the height) was an hours long discussion and not in the cards for today. Mike has done a huge study on this and stated that he found flag poles 80-95% moves superior. His studies focused on the “spirit” of what O’Neil was looking for and that was “…a rapid advance and then you don’t give up much ground.”
He expressed that he interpreted it as that people found a stock that not too long ago was worth only 40-50 dollars, and was loosely moving, but now it’s moving around a 100 dollars and is “tight.” No more definition than that. When looking at the daily:
Mike felt it was more an ascending base. That really is the bulk of their conversation
So my take is several fold. First of all Leif called 2 out of 3 charts flags. Apparently, that is his gig. I was struck, personally and in my opinion, that many of his “flags” were “to be defined” as triangles/flags/pennants or channels but not clearly or specifically flags. I did run across this, which I have not had time to view: https://www.youtube.com/watch?v=1VHZkAUu8So&t=68s. It might shed more light into his perspective.
I’m actually impressed that Webby spoke out of the O’Neil box. One of my frustrations has been the rigidity with which IBD defines things and with their own terminology. I think they have a great perspective, just too hard at times at forcing a peg (round, square or hexagonal) into the round hole of attempted definition. Don’t lose the forest for the trees. Personally, I think the candlestick perspective of group psychology fits. Flag patterns are typically swells of enthusiasm for a stock that reaches an area of price where the majority are starting to evaluate and consider if it is really worth it or more. Within that flag lies the key as to what develops next. When it’s been a 100% move, suspect a majority of the time, it continues up. I’ll try to find some examples of what I’m trying to say, but am too exhausted tonight. May even regret what I have written now in fatigue. But wanted to try and get back to the discussion ASAP.
Not to belabor the point, so last comments. Went through most of Leif’s video and indeed, he focuses essentially entirely upon his definition of HTFs. His website is championteamtrading and he has a service of course. Curious if anyone has used it or any experience with it.
His HTF Criteria, for reference are:
Form during a bull market
Have near 45-degree flagpole that rises at least 90% in 2 months or less. More than 100% preferred.
Have a tight flag that forms over 3-5 weeks, slopes downward, and retraces 10-25%. Loose flags are less desirable as are flags that slope upward.
Exhibit a decline in volume from the peak of the flagpole to the low of the flag.
From comments made, he seems to be an elephant hunter, he may only bag 1 game every three, but it’s large enough to feed the entire family. Although, sure he diversifies during market periods of consolidation or volatility. I ran his Stockcharts scan (in his video) and it only brings up one name, KC.
There’s another service trader, Nate Bear, who uses a method he refers to as TPS. Stands for Trend, Pattern, Squeeze. Same general process of a strong uptrend, stock consolidates in some form of a pattern (flag, pennant, triangle, etc) and he relies upon standard squeeze mechanics to approach a trade. I don’t use his service, but suspect by his ads that it is the same concept and approach I look for with a strong trend, consolidation pattern and breakout. Again, it’s reflecting the general crowd psychology. Mainly it’s reading the pullback. HTFs are just a subgroup of that broad approach. Important to know the specifics, but I’m not going to focus on tight criteria.
Sorry to have gone down this rabbit hole. The catch line from IBD was " Leif and Mike engaged in deep discussion on stocks that have shown elements of the high, tight flag." Not sure we got in over our knees.
Traderlion had a class with Leif that I bought. In the class he had many case studies. Some of them were Axon, NVDA, FSLR, MNST, CELH, ASTS etc. He doesn’t always start from a base. It seems a lot of the Tight Flags start from a VCP (MARK MINERVINI) style base. With is where you have a consolidation and a tight trading range that goes down to low volume than a big burst up.
Lakedog, thanks for the great post. I regards to Webby, I agree, now that Bill is gone, he will whisper us things that Bill forbade. I think talking about the VIX might have been one of them, but I have heard several. It seems like Webby has done a ton of work, much of it at Bill’s prompting or directing, but some “secret” work that he did not tell Bill about.
I have gained a lot of respect for Mike and for Justin Neilsen, both having been Bill’s “right-hand man’s” for decades. Justin is tremendously skilled also in coding and spreadsheets. Having created a lot of the framework for Mike to do his studies efficiently. Mike clearly likes to try and look at things objectively and with data. I respect them both. As well as many others I have gotten to know via IBD Live. Side note, my 3 months for $10 was up and I initiated a cancel order. That got an instant offer for 3 more months free, which I took. I’ll probably purchase for a while next year when it’s done. I can’t begin to watch it all, but even only watching portions has opened my eyes to aspects and provoked thought. Mainly why I do stocks these days anyway, better than jigsaw puzzles.
As a side note, I have a Capital One credit card that lets me create virtual cards that I can turn on/off or delete. I started this after an Etsy purchase caused my main card to be used for fraud, after which I had to get a new card. Anyway, whenever I subscribe to something that has a renewal, I use a virtual card and turn it off the day after the initial trial starts. I really love it.
Sounds like I will need to try and IBD Live trial someday, but I can barely keep up with the free videos.
The Advisors Sentiment report surveys the market views of over 100 independent investment newsletters (those not affiliated with brokerage houses or mutual funds) and reports the findings as the percentage of advisors that are bullish, those bearish and those that expect a correction. The report has been widely adopted by the investment community as valuable anecdotal evidence as to extremes in investor confidence: conditions which are often seen at major market turning points.
PuddinHead42 is correct. The BULLS vs BEARS data used in 0BULL and 0BEAR charts is from a weekly poll of investment newsletter writers and reported by Investors Intelligence. Survey may be done by AAII (not clear on that) but regardless, AAII Investor Sentiment data is very similar if not identical. However, 0BULLS is not identical to $BPSPX which is derived from BPI (Bullish Percent Index) which itself is derived from Point&Figure charting buy signals of SPX. This is the analogous to $BPNDX, which is a charting of P&F buy signals in the NASDAQ . So different, but both try to relay information as to the market sentiment to look for tops and bottoms. I don’t have an IBD graph to show in comparison.
There’s a huge host of different charts/indicators that attempt to depict market breadth or sentiment. Sentiment is often looked at in terms of volatility (ie VIX), survey data (like 0BULLS/BEARS, NAIM) or positional/price ratios (PCRatio, New Highs/Lows, etc). Google and be overwhelmed. You seem to have access to StockCharts and might find their Chart school of help in general: Introduction to Market Indicators | ChartSchool | StockCharts.com
May I ask the reason for the interest in 0BULL specifically? There easily could be similar or essentially identical graphing or data available that would serve your needs. Keep in mind that these are not price action data, hence there is an inherent wobble in the interpretation.
No question. NAAIM Exposure Index I am sure is in Tradingview. There are multiple analogous indicators/charts. Pick and work with what feels comfortable to you. They are not definitive signals, more indicators to weight the risk in positions and trades. Personally, I vary a bit but consider VIX and P/C Ratios as signs to keep an eye on.
I’ve commented before, probably in this thread, all her sell signals are more accumulative indications to sell rather than hard-and-fast triggers. This is likely where “art” comes into her plan. Note also, she totally uses the IBD approach and Marketsurge. Simplicity likely dictates her use of their key graphing signal for market sentiment. Which is an excellent one but shouldn’t discourage you from learning/using a similar chart/indicator. The key is likely identifying the behavior of what you use and embrace learning it.
As usual, I’m belaboring the point but a friend of mine who uses Marketsurge was kind enough to email me a copy of 0BULL. Wanted to look for my own education.
Kind of a messy chart, she couldn’t dump the RS or MA lines. The important component is the blue horizontal hash marks. Those are the values of interest, which I confirmed from a 2013 Investors Corner article are:
“Each week, Investors Intelligence tracks more than 100 stock market newsletters, and measures how many are making bullish calls and how many are advising against owning stocks.”
So not specifically AAII nor NAAIM, but absolutely the same in concept and practice. Remember, these are contrarian signals so the higher they go, the more bullish folks/funds are and the more worried you become that they are close to topping and going to roll over. Have to suspect that this is a secondary supportive signal and never a primary action signal for Vibha.
My ignorance is showing though, as I thought it was weekly survey data so a single number. Hence the “hash” mark on the daily. But the weekly has a “range” but closing is always the high or low. I’m likely missing something simple and obvious to others. Thanks again for the chart.
). If I remember correctly, she goes into some more depth with the origin and use of her trading plan/style.
