56th day of $QQQ short term up-trend, but likely to end on Friday; trading 3X bearish index ETF’s

GMI

3/6

GMI-2

3/8

What is the GMI?
 

WORDEN T2108

24%

I have been writing for some time that short term up-trends rarely last as long as the current one has.  The media pundits are blaming Thursday’s decline on some weak earnings reports.  That is garbage! Did you ever notice that they have all the answers after the market has moved! This decline was baked into the market over a week ago.  Go back and read my posts about the weakening DOW stocks and the tiring up-trend.  On Wednesday I went mainly to cash and a little short the major indexes (SDOW, SQQQ) with two triple leveraged bearish index ETF’s. For example, on Thursday, as the DOW 30  index declined -1.9%, the SDOW rose +5.6% . Check out this daily chart of SDOW:

SDOWdaily07312014

One has to be very careful with the 3X index ETF’s because they go up and down three times as much as the underlying index. For now, I will hold my positions and average up if the market continues to weaken. The GMI could flash a Sell signal with another weak day on Friday.  With most earnings out, we go into the summer lull, culminating in the weak month of September. The longer term trend of the market remains up, however, and I remain fully invested in mutual funds in my university pension—for now.

 

55th day of $QQQ short term up-trend

GMI

5/6

GMI-2

6/8

What is the GMI?
 

WORDEN T2108

40%

I remain largely in cash in my trading accounts.

54th day of $QQQ short term up-trend

GMI

5/6

GMI-2

6/8

What is the GMI?
 

WORDEN T2108

44%

This short term up-trend is getting tired!

53rd day of $QQQ short term up-trend; $AAPL near all-time high

GMI

5/6

GMI-2

8/8

What is the GMI?
 

WORDEN T2108

47%

AAPL approaching all-time high—green line break-out! Check out this weekly chart.

AAPLwkly07282014

 

$QQQ short term up-trend reaches 52nd day; 30% of $DOW 30 stocks weak; $GLD bottom?

GMI

5/6

GMI-2

8/8

What is the GMI?
 

WORDEN T2108

48%

The short term up-trend in the QQQ that, according to my definition (proprietary, so don’t ask for it),  began on May 13 has now extended to 52 trading days. While two of the up-trends since 2006  have lasted  80 and 88 days, of the 11 up-trends that lasted  50 to 88 days, 45% ended by day 54. So we are in nosebleed territory at day 52.  On the other hand, I am talking only about short term QQQ up-trends.  A short term up-trend could end, pause and then begin anew.  The prior short term down-trend lasted just just 4 days. Remember also that the GMI, my longer term trend indicator, has remained on a Buy signal since April 22. So I remain very cautious, having taken profits on most of my positions in my trading accounts.  My conservative university pension remains fully invested in mutual funds….

What makes me very concerned about this market is the large number of DOW 30 stocks, 9 0r 30%, that have now closed below their critical 30 week moving averages.  According to Weinstein Stage Analysis, one should be invested in stocks when they are in Stage II, above a rising 30 week moving average.  I never hold a stock that closes below its 30 week average. The following DOW stocks have now closed below their 30 week averages, after having been in Stage II advances for many months: BA,UTX,WMT,DD,PFE,GE,V,PG,MCD. These weekly charts show how weak BA, UTX and DD have become. The solid red line is the 30 week average. Click on charts to enlarge.

BAweekly07272014UTXweekly07272014DDweekly07272014Even GE seems to be faltering, with the 2014 advance stopping short of its 3013 peak.

WeeklyGE07272014

When major industrial stocks like these appear to be weakening, can the rest of the market be far behind?

And gold may be in the final stages of a bottom, Stage I, as this weekly chart of GLD shows.

WeeklyGLD07272014

Meanwhile, the GMI remains at 5 (of 6).  It is noteworthy, that its one negative component, is the one that measures whether stocks that hit a new 52 week high 10 days ago have continued to trade higher.  It is ominous when stocks hitting new highs cannot continue to climb. If this market starts to crack, it should show up in my GMI-2 first, which contains a few very short term indicators.

GMI07252014

 

 

51st day of $QQQ short term up-trend

GMI

6/6

GMI-2

8/8

What is the GMI?
 

WORDEN T2108

53%

GMI back to 6, but I remain cautious.

50th day of $QQQ short term up-trend

GMI

5/6

GMI-2

8/8

What is the GMI?
 

WORDEN T2108

55%

Long term trend of QQQ remains up in a Stage 2 advance.  Short term up-trend is getting tired. Since 2006, only 9 of the 54 short-term up-trends of the QQQ have lasted longer than 50 days. After earnings season we will enter the dreaded September/October period.

49th day of $QQQ short term up-trend

GMI

5/6

GMI-2

8/8

What is the GMI?
 

WORDEN T2108

53%

With AAPL down in the after-market after posting solid earnings, this short term up-trend may be becoming a little old.  This is not the time for me to add new positions in my trading accounts.

48th day of $QQQ short term up-trend

GMI

5/6

GMI-2

7/8

What is the GMI?
 

WORDEN T2108

49%

AAPL reports earnings today after close.

GMI still on buy signal from April 22

GMI

5/6

GMI-2

6/8

What is the GMI?
 

WORDEN T2108

51%

It was great to see many of you at Saturday’s  AAII workshop.  Friday was 47th day of current $QQQ short term up-trend.  IBD still sees “uptrend under pressure.”

This weekly chart shows that QQQ remains in a strong Stage 2 up-trend, however. Click on chart to enlarge.

QQQwkly07182014

GMI07182014



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