$DIA and $QQQ still struggling; GMI still at zero (of 6); mainly in cash

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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.

DIAdailyguppyThe 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….

DIAdguppyMeanwhile the GMI remains at zero (of 6). I remain on the sidelines, mainly in cash…..

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Daily Guppy charts of $QQQ and T2108 turn negative; GMI turns 0 (of 6)–mainly in cash

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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.

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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…

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Dollar Dives and Gold Gets Going–bull market to be Trumped?

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I think my adapted GMMA charts of gold and the dollar tell the whole story. This weekly GMMA chart of the dollar ETF, UUP,  shows a developing BWR (blue/white/red) decline pattern. The six shorter term averages (red lines) are now below the longer term averages (blue lines). The white space separating them is yet to clearly develop. Note the contrast of the current pattern with that from the prior two years.

Screen Shot 2016-05-01 at 1.39.02 PMAnd the gold ETF, GLD, now shows the opposite advancing RWB pattern with a white space developing between the red and blue lines. Again, note the long period the past 3 years when gold was declining and the red lines were consistently below the blue lines.

Screen Shot 2016-05-01 at 1.40.20 PMI will leave it to others to opine about why the dollar is declining. However, a weakening dollar might help international companies when they  convert their foreign earnings into more dollars. But a weak dollar means higher commodity prices and therefore more inflation. Will higher inflation then lead the Fed to raise interest rates and to support the dollar?  Such a scenario of higher interest rates would eventually hurt the stock market. It always has. Regardless, for now, with GLD in an RWB up-trend, it may be advisable for me to hop on the gold train….

In contrast, the GMMA of the SPY shows a gyrating market with the nice RWB pattern of 2014 to mid 2015 clearly over. At some point a persistent RWB or BWR pattern will develop and it will pay to be fully invested with that trend.

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The tech stocks, measured by QQQ,  look a lot more weak. A major decline will be likely if the short term averages (red lines) continue their decline below the longer term averages (blue lines.) A possible head and shoulders top formation is quite evident in this GMMA chart of QQQ.  The downward sloping neckline, caused by the most recent decline having ended lower than the prior decline is considered by technicians to be a major sign of weakness. Regardless of whether a major decline materializes, it is obvious to me that the momentum of the tech stocks is quite different now than we had in 2014 and the first half of 2015. I need to be very careful. It is much easier to profit on the long side when the averages are in RWB up-trends….

Screen Shot 2016-05-01 at 4.13.39 PMAnd almost on cue, the GMI, at 3 (of 6)  and the GMI2, at 1 (of 8)  are telegraphing market weakness. And the QQQ has now closed below its critical 10 week average. With the beginning of the Sell in May period, a possible Fed interest rate hike in June,  and a tumultuous election period on the horizon, this aging bull market may  be about to be Trumped…….

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Critical week for techs and the $QQQ

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Last week the tech stocks under-performed and many high yielding “safe” stocks faltered. This weekly chart of QQQ (the NASDAQ 100 index ETF) shows that the index is resting on its 30 week average (red line). A close below this critical support would be very significant. With AAPL reporting earnings on Tuesday and FB on Wednesday, we will soon see if the QQQ can hold. The QQQ is basically at the same level it was about a year ago. The pattern here could be seen as a head and shoulders top. If the 30 week average turns back down, there could be a significant  Stage IV decline.

Screen Shot 2016-04-24 at 7.35.34 PMWhile the GMI remains strong at 5 (of 6) the more sensitive and short term GMI2 is now at 3 (of 8).

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Earnings begin; will $QQQ break out of its channel?

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Will the market rise with earnings coming?  While reporting companies can blame their past weak results on the strong dollar, maybe they will forecast better results this quarter, with the dollar weakening. The QQQ is in a tight channel.  If this channel fails to hold, I expect support at the lower 15.2 Bollinger Band, around 106.44.  If this level were to fail, I would expect more weakness. But the rising 30 day average (red line) is an important sign of strength.

Screen Shot 2016-04-10 at 6.02.08 PMThe GMI is at 4 (of 6) and still on a Buy signal.

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