My market indexes on brink of turning positive; buying climax?

GMI

5/6

GMI-2

7/8

What is the GMI?
 

WORDEN T2108

47%

With the GMI back to 5 and the short term trend about to turn positive, it looks like we may have had another small and short lived correction. IBD still sees the market in a correction and is waiting for a follow-through day to this current snap back rally. I still think this rise could be a brief bout of year end mutual fund buying (window dressing) that could quickly disappear with the new year.  So I must be very nimble and ready to exit if the market fails to surpass its recent peak of 2079 on the S&P500 and 106 on the QQQ. Below is the daily chart of each index. This rally  seems a little too frenetic to me–climax run? Given that the market always falls quicker than it went up, the next decline will likely be a doozy. Note the 30 day average (red line) of both indexes is flat, which often leads to a lot of whip-saws. Failure of these averages to hold this line on Friday would be a very bearish sign to me.

SP50012192014

QQQ12192014

3rd day of $QQQ short term down-trend; Dead cat bounce? $CELG bounces

GMI

1/6

GMI-2

2/8

What is the GMI?
 

WORDEN T2108

37%

It is too early to discern if Wednesday’s bounce from oversold will hold. This is likely a good opportunity for me to reduce my holdings in mutual funds in my university pension accounts. I am not willing to risk a return to the losses my 403 (B) sustained before yesterday’s bounce. Failure of this bounce to hold would be bloody. For now, the short term trend of the QQQ remains down.

On the other hand, a lot of my oversold bounce alerts in TC2000 went off on Wednesday. If the market were in a short term up-trend I would buy some of these bouncing stocks.  An example would be CELG, which bounced from its lower 15.2 daily BB and crossed above its 30 day average. Check out this daily chart. Note the similar bounces that occurred last October and again in November. If I had purchased CELG yesterday, I would have placed my sell stop just below the bounce, around 108.25. This is one of the best scans that I teach my university students to run on TC2000. I also put my students on a list to receive all of my TC2000 alerts as they are triggered. Let’s see if CELG (and others like it) can hold this bounce for a few days.

CELG12172014

 

 

2nd day of $QQQ short term down-trend; super cautious

GMI

1/6

GMI-2

1/8

What is the GMI?
 

WORDEN T2108

27%

Market is getting very oversold.  T2108 is at 27%, 598 daily new lows, 62% of stocks with an oversold 10.4 stochastic, GMI and GMI-2 both= 1. And yet the longer term trend of the market is still up, in a Weinstein Stage 2 up-trend. Based on my 45+ years of trading experience I think the market has further to decline. So many people have come to   believe that the market only rises, based on the past 5 years of gains.  When the new year starts many may be willing to sell and take their gains in the new tax year. And then there are all of the retiring boomers who will panic from the fear of their imminently needed retirement savings diminishing. I just remember a lot of significant market tops occurring in January…….

Tuesday was the second day of the new $QQQ short term down-trend. I own mainly SQQQ and will accumulate more if this decline lasts 5 days. Since 2006, about 40% of  short term down-trends (the way I define them)  have lasted   5 days or less. Once one passes 5 days, it often goes a lot further. I remain largely in cash in my trading accounts. If I could frequently trade my mutual funds in my university pension, I would have transferred some money to money market funds.  We need to be super cautious and to read what Mr. Market is telling us about his likely direction.

This monthly chart of the SPY shows that the current decline hardly registers. This could mean that the current decline will be tiny or that it is yet to begin…. (red arrows show month of May to track the sell in May signal)

SPYmonthly12162014

 

GMI signals Sell; New $QQQ short term down-trend; IBD calls correction

GMI

1/6

GMI-2

2/8

What is the GMI?
 

WORDEN T2108

30%

With the GMI at 1 on Monday, this marks two days below 3 and a new Sell signal.  The QQQ short term trend also turned down.  IBD signaled on Tuesday that the market is now in a correction. I am almost sold out of all of my long positions and hold some SQQQ. Time to watch from the sidelines. This daily chart of the QQQ shows the recent GMI buy and sell signals. Click on chart to enlarge.

QQQdaily12152014

Trend change imminent; World markets in free-fall

GMI

2/6

GMI-2

3/8

What is the GMI?
 

WORDEN T2108

36%

The GMI registered 2 after Friday’s close and will likely be 2 or less again on Monday, triggering a GMI Sell signal. If so, I will close out my few longs and accumulate a leveraged inverse ETF (SQQQ). The T2108 is at 36% and has a long way to fall before our markets are at the level where declines typically end. (See weekly chart below.)

GMI12122014T2108wkly12142014

I am very concerned that many of the world’s markets are in free fall and we tend to pretend that the U.S. market is immune from the fall-out. Do we really think that the U.S. economy exists in its own cocoon? Take a look at the recent weekly charts of some of the foreign ETF’s:

TRF: Russia/East Europe:

TRFEWZ: Brazil:

EWZEWG: Germany:

EWGEWC: Canada

EWCEWW: Mexico:

EWWUSX–X: China:

USX--XCEE: Central Europe, Russia, Turkey:

CEEAre we worried yet? Or maybe it’s just a benign and temporary oil price precipitated scare….. (would you like to buy a bridge?) I’m not going to wait around to find out. (I have told you I trade like a chicken.)

 

 

34th day of $QQQ short term up-trend; $ALDR-another biotech green line break-out

GMI

4/6

GMI-2

3/8

What is the GMI?
 

WORDEN T2108

45%

QQQ, DIA and SPY  are  all on support. Friday will tell the resolution. Meanwhile, in the midst of all of this market volatility, ALDR had a  green line break-out to an all-time high on Thursday.

ALDR12112014

$QQQ short term up-trend in jeopardy; mainly in cash; $NVAX strong

GMI

4/6

GMI-2

3/8

What is the GMI?
 

WORDEN T2108

45%

I wrote yesterday that it was critical that Tuesday’s bounce up off of support needed to hold on Wednesday to continue the short term up-trend. It did not, with the SPY and DIA leading the QQQ lower. Tuesday’s bounce was totally reversed. I am largely in cash in my trading accounts now as I wait for the dust to settle. (During Tuesday’s bounce, I had closed out my hedge in SQQQ.) So many people have been counting on a strong end of year.  This weakness could set that up, but I am not going to bet on it.

One of my few remaining positions is a biotech which Judy alerted me to years ago. It rose on Wednesday, indicating considerable relative strength. Here is the daily chart for NVAX.

NVAX12102014

 

32nd day of $QQQ short term up-trend

GMI

6/6

GMI-2

3/8

What is the GMI?
 

WORDEN T2108

55%

Stocks reversed up off of support. It is critical to this short term up-trend that these levels hold on Tuesday.

30th day of $QQQ short term up-trend

GMI

6/6

GMI-2

3/8

What is the GMI?
 

WORDEN T2108

54%

The GMI-2 has fallen to 3, reflecting the short term weakness in the major indexes. There were more new lows than new highs on Monday. I still have calls on SQQQ to hedge my long positions. Be careful!

9 Biotechs and 1 ETF near green line break-outs (all-time highs): $AGIO,$ALXN,$BSTC,$CMRX,$ENTA,$ILMN,$JAZZ,$KITE,$RGLS,$BIB

GMI

6/6

GMI-2

6/8

What is the GMI?
 

WORDEN T2108

59%

Most of the stock gurus whom I respect have written that one can make the most money by investing in  companies that have visionary, often revolutionary products. When Nicolas Darvas made millions  in the 1950s he invested in rockets, as the country became involved in a race to space. Other more recent examples are the PC revolution, the internet, and now Elon Musk’s foray into electric cars, solar energy and commercial space travel. Today we are in the middle of a huge revolution in biotechnology as scientists begin to use their understanding of the human genome to make new drugs and medical  treatments never thought possible. There is  a revolution occurring in the biotechnology sector and astute investors who own these firms will be well rewarded when a new drug or breakthrough treatment is announced.

A major way that I have developed to alert me to promising new stocks that are being heavily accumulated is my green line technique. On a stock’s monthly chart I draw a green line at the highest price the stock has ever reached and has not surpassed for at least 3 months.  The green line signifies the top of a base or consolidation period at which the stock has rested for a few months. When a stock pushes through its green line top, especially on unusually high trading volume, I take notice.

I have put together a list of 9 biotech stocks and one ETF that have recently passed their green line tops. These are stocks which I then research to assess the probable developments that are causing buyers to push them to all-time highs. Biotechs often do not have earnings. It is the possibility of future earnings to be derived from newly developed exciting products that ignite buyers’ imaginations. I just want to hitch a ride on a rocket. By the way, I own some of these stocks.

Their weekly charts, in alphabetical order:

AGIO12072014ALXN12072014BSTC12072014CMRX12072014ENTA12072014ILMN12072014JAZZ12072014KITE12072014RGLS12072014And one leveraged ETF…..

BIB12072014The GMI remains at 6 (of 6):

GMI12052014

 



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