Friday was the 19th day of the QQQ short term down-trend, within a longer term down-trend. The Dow 30 stocks, measured by the ETF, DIA, is weaker than the QQQ. Note in this daily Guppy chart that the DIA is lower than all 12 daily moving averages. The dotted line is the weekly close of the DIA. The dotted line tends to lead the averages. The shorter term red averages are declining and if they create a BWR (blue/white/red) pattern the market will be in another swoon. Note the preceding RWB advancing pattern.
The QQQ is showing a little more strength, but it remains in a BWR down-trend. . While it closed Friday below all of the blue (longer term) averages, the QQQ has climbed above all of its red (shorter term) averages. It has done this 2 times in the recent past and each attempt has failed to climb above the blue lines. A close of the QQQ above all of the blue lines (around 106.92) would be a strong show of strength and might signal the end of the BWR pattern. Stay tuned….
With the put/call ratio on Thursday at 1.19, there will likely be an up day on Friday. Also, the major market indexes I monitor all bounced up from their lower 15.2 daily Bollinger Bands on Friday. Check out this daily chart of the QQQ. With the GMI at 0, I remain in cash and a little short.
All six of the primary indicators counted in the GMI are negative (see GMI table at bottom). The only positive sign I see is that the put/call ratio on Friday, a contrary indicator now indicating many option traders are bearish, suggests that we could get a quick short term bounce on Monday. But these modified daily Guppy charts of QQQ (Nasdaq 100 ETF) and T2108 (a measure of the % of NYSE stocks that closed above their average price over the past 40 days) suggest that these indicators are turning down. These daily Guppy charts show that the shorter term averages (red) are moving below the longer term averages (blue). Until these averages return to a rising RWB (red/white/blue) pattern, I believe the trend is down.
Here is the GMI table. A GMI reading of zero is for me, a sign of significant market weakness. Note the SPY has now closed below its 10 week average, joining the QQQ. I am a chicken trader and therefore am now mainly in cash in my trading accounts with a small position in SQQQ, a leveraged ETF which is designed to rise 3X as much as the QQQ falls. My first priority is to conserve capital so that I live to trade another day…