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New QQQ short term down-trend; mainly in cash, and one AZO call

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The QQQ began a new short term down-trend on Tuesday.   Nevertheless, note that bearish adviser sentiment is only 4 percentage points below bullish sentiment.   This is a contrary indicator and suggests that much of the selling may be over.   It is rare that bearish sentiment gets close to or above bullish sentiment. The T2108, while low at 22%, is far above the 7% seen at the lows on August 8. If the August lows hold, we could see a major rally develop.   I remain almost 100% in cash until a longer term up-trend develops with the GMI around at least 4.

Continuing my search for new leaders, note that two auto parts stocks, AZO and ORLY, showed up on the new 52 week high list on Tuesday.   I could not resist buying a Sept 300 call option on AZO, in my most speculative trading account. Having a stock at a new high after all of the market weakness is a terrific sign of technical strength and AZO could rise if the market rebounds.   AZO is one of the nine high priced leaders I follow regularly. Below is a monthly chart of this growth stock (click on to enlarge).

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Futures portend down open; new QQQ short term up-trend in jeopardy; still in cash

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I have been saying for quite some time that we needed to wait until the counter-trend rally was complete in order to see if the recent bottom will hold.   If the bottom holds, we could see the rally resume.   Still, the market remains in a longer term down-trend for now and it makes the most sense to me to stay in cash until the trend turns up.   The new QQQ short term up-trend could end with a decline on Tuesday. With the GMI at zero, it makes no sense to have any long positions.

I love to watch the new high list for clues to the next leaders when the market recovers.   Most stocks hitting new highs are gold-related. However, several other strong stocks that I am watching are:   MAKO, JAZZ, COG, CF and ALXN.   I will watch them patiently until the market trend turns up and the GMI approaches 4.

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2nd day of QQQ short term up-trend; in cash

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This new QQQ up-trend is uncertain for me until it reaches the 5th day.   Once a short term trend lasts 5 days it is much more likely to continue.   The adviser poll results in IBD show only about 4% more bulls than bears.   Having so many advisers being bearish is a sign of possible strength for the market.   If we could get more bears than bulls, we might have a true bottom of the decline in place.   Note that the T2108 is at 31%, back into neutral territory. I remain in cash.

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Day 1 of new QQQ short term up-trend

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While Wednesday was the first day of the new QQQ short term up-trend, I normally want to see   a new trend last for 5 days before I become confident in it.   The longer term trends remain down and I am cautious about this rally’s ability to break through resistance. I would like to see the GMI rise to 4 before jumping back in on the long side.

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Change to QQQ short term up-trend on Wednesday? Market can rally on low volume!

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Another up or flat day on Wednesday will change my QQQ short term trend count to an up-trend.   Tuesday was the 20th day of the current short term down-trend.   The longer term trend remains down.   September is typically the worst month of the year for the market, so I would not be surprised to see a decline start soon. By the way, I am not concerned that the market is rising on sluggish volume.   The multi-month rally that began last September also came on below average trading volume. Check out this monthly chart of the QQQ (click on chart to enlarge).

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