Still Quad 2, we stay bullish...

Cycs strong, Gold & Silver strong, leading stocks with good fundamentals are fine!

Andreas Himmelreich

Apr 05, 2024

The call for next week

The call for next week is a Quad 2, we stay bullish!

I am long about 95%.

Yes, the Thursday sell off was scary, but a ton of leading stocks stayed strong:

From 75 Stocks as a base selection I use for momentum trading (from different systems), 34 (!) printed a one week high on relative strength (last week 30) on this Fridays close.

Moves like SPOT 0.00%↑ META 0.00%↑ NTNX 0.00%↑ or DELL 0.00%↑ this week do not happen in a weak market.

When the QQQs where down > 2% on Thursday, those above stocks where not down 7-8%, the damage was tame!

Also, on Thursdays close (low of the week) there were still 30 stocks of the above list printing a weekly relative strength high (e.g. relative strength for the week was up).

I get it, Thursday was shaky and the QQQs do not look strong (they look bad!), but a ton of individual stocks do well.

And defensives (indication for a Quad 4) are weak, weak, weak:

Again, if the Quads turn to Quad 3 (Tech weak, Energy strong) there will be damage, I will have a drawdown, but that is the name of the game. In this regard, bull markets are even more challenging than bear markets, because you live in constant fear to lose 10% of the high mark of your capital curve. I try to embrace that fear and follow my framework.

R&D on Momo Trading

My R&D Breakout / Momo Trading is going well, I will do some videos at a later stage:

The key (so far) was to limit the stocks I watch + setups that I can see (not other traders setups, that I cannot see in real time, I can only follow my own rules that I figured out by tape watching and back-testing by myself, only that builds conviction for me, important lesson!).

From last week (now is Friday evening 4/5/2024) I am still in AEM 0.00%↑ YPF 0.00%↑ NXE 0.00%↑

This week I took SPOT 0.00%↑ and I got shaken out of a couple of names (the damage was limited).

I also took AMZN 0.00%↑ today (Friday) right after the open, but sold at the close (purely fear driven ;-) I should have stayed in but tricked myself: “o.k., you are selling this fresh position, but the rest the hell stays!”.

Also I was shaken out of CADL 0.00%↑ —> 5 min after my stop loss was hit it went ballistic ;-) (stop loss was too tight, my rule is on those breakouts to take the low of the day).

The good news is my scans catch those opportunities and I have rules on which breakouts to take. So, all good!

By the way, the best momo breakouts (on the hourly) happen, when breadth is washed out on the hourly (right chart).

Check it for yourself: The big SMCI 0.00%↑ and NVDA 0.00%↑ breakouts (not this week, I mean when they happened ;-)) had similar patterns on T2100: breadth was washed (+Quad 1-2 was thinner than the week before!) out on the hourly + on the hourly both stocks had an up trending relative strength (yes, also on the weekly relative strength was very strong, which is part of my rule framework).

Quad 1 turns to Quad2, take the trade!

Also, for me as a reminder: Energy is a great diversifier in a Quad 1-2 —>

In a Quad 1-2: if Energy crosses over the lower band of the Keltner channel + has a 4-week high on relative strength, the trade is relative save to take (this is the second time I missed this, same happened to me last summer!). Important to know that the relative strength patterns on a bit lower beta exposures are different from high beta exposures. On high beta exposures (Tech) I take the cross of the upper Keltner channel of relative strength on the weekly, on a bit lower higher beta exposure (Cycs, Energy), above chart is good enough! (But I never trade defensives on relative strength: they trend badly!).

Small cap value momentum

Small cap value momentum systems stay very, very strong.

They love a deep Quad 2 with cycs leading :-)

All right, wish us good luck and have a great weekend.

All the best and best regards.

Andreas

P.S. Earthquake in New York and who is in New York: My wife and my youngest son ;-)

The information on from Andreas Himmelreich / QuantStrike and this video / blog is for information and discussion purposes only. It does not constitute a recommendation to purchase or sell any financial instruments or other products. Investment decisions should not be made with this video / blog, and one should consider the investment objectives or financial situation of any person or institution.

Investors should obtain advice based on their own individual circumstances from their own tax, financial, legal and other advisers about the risks and merits of any transaction before making an investment decision, and only make such decisions based on the investor’s own objectives, experience, and resources.

The information from Andreas Himmelreich / QuantStrike and this video / blog is based on generally available and paid information and, although obtained from sources believed to be reliable, its accuracy and completeness cannot be assured, and such information may be incomplete or condensed. All performance results are hypothetical and the result of back testing only. Out-of-sample performance may be different. No claim is made about future performance.

Investments in financial instruments or other products carry significant risk, including the possible total loss of the principal amount invested. Andreas Himmelreich / QuantStrike and this video / blog do not purport to identify all the risks or material considerations which may be associated with entering any transaction. Andreas Himmelreich / QuantStrike and this video / blog accepts no liability for any loss (whether direct, indirect or consequential) that may arise from any use of the information contained in or derived from Andreas Himmelreich / QuantStrike and this video / blog.

Trading for a sub 1 Million Account

Discussion about this post