19th day of $QQQ short term up-trend; $GMCR breaks out early in 2009

GMI

6/6

GMI-2

7/8

What is the GMI?
 

WORDEN T2108

63%

A reader asked me whether at the end of a major market decline I still look for green line break-outs.  Absolutely!  After a major decline there are few stocks at all-time highs.  That is where the new leaders are.  In March of 2009, I spotted GMCR breaking above its green line top to an all-time high. I even posted about it!

Check out this monthly chart of GMCR.

GMCRmonthly03032015

THE $LL debacle–GMMA gave clearer warning than Stage Analysis

GMI

6/6

GMI-2

7/8

What is the GMI?
 

WORDEN T2108

64%

If you watched 60 Minutes on Sunday night you know why LL fell out of bed on Monday, down -25%. But should anyone have been holding LL stock recently?  My students would have probably been out of LL simply by looking at a weekly chart and applying Weinstein’s Stage Analysis technique. LL was below its 30 week moving average, which had topped out a year ago. LL closed below its 30 week average last week after spending a few weeks above it in January and February.  This could have caused a head-fake as a possible beginning Stage 2 advance, but note that LL was below its final green line top at around $120. I tell students only to hold stocks above a stock’s last green line top. The solid red line in this weekly chart is the critical 30 week moving average. Notice the strong Stage 2 up-trend throughout all of 2013.  I only own stocks that are in Stage 2 up-trends.

LLweekly03022015I decided to also look at the weekly modified GMMA chart for LL. I was struck by the fact that this chart did not show the recent head-fake in January and February.  The RWB pattern had clearly ended in 2013 and we never got a RWB pattern since. The GMMA chart clearly provided the better indication that one should not have been in LL since at least June, 2014, when a bearish BWR pattern became evident. Beware the whites of their charts!

LLGMMA03022015

On my use of the GMI, A Darvas type RWB rocket stock: $AMBA

GMI

6/6

GMI-2

8/8

What is the GMI?
 

WORDEN T2108

64%

Most of my readers know that using many of the indicators counted by the GMI (see box at bottom of this page) I was successfully able to stay out of the market during most of the 2000 and 2008 declines. After a bottom was in I reinvested on the long side. The GMI has a very good track record but every time it turns to a Sell does not signify to me that a major decline is beginning. In the past, the 30 week average of the QQQ had to turn down to get me to pull my most conservative pension money out of the market. In spite of the fact that this critical moving average did not turn down in the past year, I mistakenly (in hindsight) took most of my university pension out of mutual funds and put the proceeds into money market funds. The huge increase in my pension account since 2009 together with my fear of losing the gains caused me to ignore my primary rule and to prematurely go to cash.  I am back in the market now. I wanted to clarify this situation for my readers, many of whom are interested in knowing what I am doing with my pension account. As one gets closer to retirement, s/he must deal with the fear of losing needed savings versus staying invested.  This is a very difficult challenge for boomers who wish to manage their money. I use the GMI and my short term trend count to guide my trading in my most speculative and short term accounts….

As you know, one of my most celebrated stock gurus is Nicolas Darvas, who made a fortune in two years in the 1950s by teaching himself how to trade. His book (How I made $2,000,000…” is listed to the right of this post and is the first book I assign to my university students. Over the years I have designed an EasyScan in TC2000 that scans all stocks for stocks that I think might have met Darvas’ selection criteria. I ran the scan of almost 6,000 stocks this weekend and it came up with 46 stocks. (I talk about the Darvas scan in my 2012 Houston TC2000 webinar video, whose link is in the green box on this page.) Below is one stock, AMBA, that came up in the Darvas scan and that is also  above its recent green line all-time top. This modified weekly GMMA chart shows that AMBA has the RWB pattern and recently broken above all of its shorter term averages (gray dotted line above all red lines). AMBA is worthy of my researching. Note that AMBA is due to report earnings this week, on March 3rd.

AMBAGMMA02272015

Meanwhile the GMI remains at 6 (of 6) and on a Buy signal.

GMI02272015

 

16th day of $QQQ short term up-trend

GMI

6/6

GMI-2

8/8

What is the GMI?
 

WORDEN T2108

64%

11 stocks came up on my new high with good fundamentals scan:

Screen shot 2015-02-26 at 9.41.04 PMCheck them out.

15th day of $QQQ short term up-trend; Beware of $TSLA and $SNDK

GMI

6/6

GMI-2

8/8

What is the GMI?
 

WORDEN T2108

65%

TSLA has a troubling GMMA chart.

TSLAGMMA02252015As does SNDK:

SNDKGMMA02252015

14th day of $QQQ short term up-trend; 12 promising stocks at new highs

GMI

6/6

GMI-2

8/8

What is the GMI?
 

WORDEN T2108

64%

Twelve stocks came up in my new high and great fundamentals scan.  All of these stocks have RWB rocket patterns and are worth researching.  All but BMA are at all-time highs. I own two of them.

Highfund02242015

 

13th day of $QQQ short term up-trend; $AAPL, $SWKS–RWB stocks

GMI

6/6

GMI-2

8/8

What is the GMI?
 

WORDEN T2108

64%

AAPL remains in an RWB rocket pattern.

AAPLGMMA02232015As does its supplier, SWKS.

SWKSGMMA02232015

Both are above their green line, all-time peaks.

An important limitation of the GMI signals

GMI

6/6

GMI-2

8/8

What is the GMI?
 

WORDEN T2108

64%

I have found that since 2006, the GMI has done a good job of keeping me on the side of the general market trend. It is my cardinal rule to trade consistent with the market trend.  While the GMI has helped me to exit the market in prior major declines, I have discovered an important limitation while examining GMMA charts. From the GMMA chart of the QQQ below, I can see that since early 2014, the GMI has issued 7 separate Sell signals (red arrows) followed by 7 Buy signals (green arrows). However, during this entire time the QQQ has remained in a strong RWB up-trend, with all of the shorter term averages (red) above the rising longer term averages (blue)!

QQQGMMA02202015It is clear to me that a GMI Sell signal should only be used by me  for short term trading decisions. Last week I posted that prior major market tops have been signaled when the shorter averages declined below the longer term averages. I should therefore probably remain invested long term in the market (at least in my university pension account) as long as the RWB pattern is in place, even when the GMI signals Sell. I am reinvesting my pension funds back into mutual funds. In the future I will use the GMI signals only to guide my shorter term trading in my more speculative accounts. I will heed the GMMA chart for longer term trends. One must never stop learning and adapting when it comes to the markets….

The GMI remains at 6 (of 6).

GMI02202015

11th day of $QQQ short term up-trend

GMI

6/6

GMI-2

8/8

What is the GMI?
 

WORDEN T2108

62%

My indicators remain all positive.

10th day of $QQQ short term up-trend

GMI

6/6

GMI-2

8/8

What is the GMI?
 

WORDEN T2108

62%

GMI is back to 6 (of 6).



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