MonthSeptember 2020

David Ryan on the Telltale Signs of a Correction

On a recent IBD Investing podcast, Irusha Peiris and David Ryan walked through a number of clues that may indicate we are heading into a correction. The chart of QQQ was used as many of recent leaders can be found in the Nasdaq 100.

I annotated a chart of the key points and added some additional notes as it relates to the moving averages and RS Line.

It’s important to note, these same principles apply regardless of the index, so I’d recommend keeping this information handy for future reference.

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TSLA Swing Trades

Given how quickly TSLA can move, in both directions, at this point I’m more comfortable with swing trades over a position trade. With that said, had I purchased TSLA in the $100-$200 range, I’d probably have a completely different perspective.

All the details of my swing trades are shown in the image that follows:

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Bucking the Trend – RS Line New High Screen

The Nasdaq has been on a steady decline since last Thursday (9/3/2020). Today the Nasdaq officially closed below both the 50-day and the 10-week moving averages.

How about a screen looking for stocks bucking the trend? This screen focuses on:

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RS Line and Recent High in thinkscript

One very helpful gauge within MarketSmith is the RS Line, which represents a stock’s performance versus the S&P 500. As growth traders, we look for an upward trending RS Line.

In addition to MarketSmith, I also use thinkorswim, as I can write scripts to customize the charts, do back-testing and otherwise tinker with the UI. I thought it might be a nice addition to my workspace to show an RS Line indicator.

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