2nd day of new $QQQ short term up-trend

GMI

6/6

GMI-2

7/8

What is the GMI?
 

WORDEN T2108

39%

My GMI sign post to the right may be wrong. The GMI went to a Buy at the close of  July 14.  The futures (light blue horizontal arrow on chart) suggest that QQQ will open around the top BB today. About 40% of the Nasdaq 100 stocks now have an over-bought stochastics. This bounce has been very rapid, up 4% in 5 days–unsustainable! Remember, the market always falls faster than it rises. A break to new all-time highs followed by a reversal would be a significant sign of a major top. IBD still sees market uptrend under pressure.

QQQ07152015

 

GMI signals BUY

GMI

6/6

GMI-2

7/8

What is the GMI?
 

WORDEN T2108

41%

Enjoy the rally while it lasts.

Bounce continues

GMI

4/6

GMI-2

7/8

What is the GMI?
 

WORDEN T2108

38%

It remains to be seen how far this bounce will carry. IBD still sees uptrend under pressure. Another up day will turn the GMI to a Buy signal.

Schizoid Mr. Market

GMI

3/6

GMI-2

2/8

What is the GMI?
 

WORDEN T2108

33%

The famous J.P. Morgan, when asked what the market will do, responded with, “It will fluctuate.” Today we use the euphemistic term, volatility. Mr. market is driven today by extreme news events coming out of Greece and China. Do we really believe the Chinese government can permanently kill a panicked bear by suspending trading in one half of the stocks, and other ridiculous trading prohibitions that you may read about elsewhere? And then we have the Fed threatening to begin raising interest rates later this year. Put this together with the fact that this is an old bull market and we are nearing the season of market weakness, it is probably safer to pull back and conserve cash. But the market often rises as earnings are released.

With that as a context, what are my technical indicators showing? The QQQ closed back above its critical 30 week average after being below it during the week. This was the 4th time that the QQQ has found support at this average since 2014. The 30 week average is the solid red line. The red arrows signify a GMI Sell signal and indicates that during this bull market one would have done well by buying stocks when the GMI issued a Sell. So we could get another rise from this week on. But if this rally should fail to break to new highs and breaks below last week’s low, look out below. Over a long multi-year period the GMI has kept me out of bear markets. I don’t mind exiting with a GMI Sell and going back in if the market rally resumes. This is a benefit of trading in a tax deferred IRA where I can go in and out without any tax consequences.

QQQweekly07122015The GMMA weekly chart also shows a market still in an up-trend with an RWB pattern. Note the QQQ closed Friday below all of the shorter term (red) averages, as designated by the dark dotted line.

QQQGMMA07122015The daily chart of the QQQ also shows a likely bounce from oversold levels. The QQQ Stochastics (not shown) recovered from an oversold level (<20) and the QQQ also bounced twice from its lower BB. It is a negative, however, to see the lower BB in a steep decline. A rally to 109, the level of the peak reached on March 20,  would paint a very nice symmetrical triple top formation.

QQQdialy07122015

AAPL also regained its lower BB on Friday, but AAPL looks very weak to me. While we may get a rise into earnings, I would not trust it unless it breaks above the upper purple line to a new high.

AAPL07122015The GMI remains on a Sell signal and Friday was the 9th day of the QQQ short term down-trend.

GMI07102015

With $AAPL breaking down, this market is in trouble

GMI

0/6

GMI-2

0/8

What is the GMI?
 

WORDEN T2108

24%

AAPL07092015

GMI at 0 –first time since last October

GMI

0/6

GMI-2

0/8

What is the GMI?
 

WORDEN T2108

23%

The QQQ, SPY and DIA are now below their critical 30 week averages. The collapse of the China markets may have serious repercussions for the rest of the world’s markets. I am all in cash with a few short positions. The key is to conserve one’s capital so that s/he can  invest when the clouds recede. I am not yet pulling my university pension accounts out of mutual funds yet, but I will, if the 30 week average of the QQQ and SPY turn down. Below is the weekly chart of the QQQ. Note that the index has  rarely closed below its 30 week average (solid red line). The last time was during October’s decline. Will the index bounce as it did then?

QQQweekly07082015

Very cautious

GMI

1/6

GMI-2

2/8

What is the GMI?
 

WORDEN T2108

30%

Sold some of my long positions on Tuesday. Market is treacherous right now. Mainly in cash in my trading accounts.

Markets bounce and hold–it’s all Greek to me……

GMI

1/6

GMI-2

1/8

What is the GMI?
 

WORDEN T2108

27%

When the markets open strongly down, I look for stocks in my watch-list that are holding up.  There were a number on Monday that showed great relative strength and I nibbled at them. These include OPK, ITCI, AMBA, PANW, and INGN.  If they hold, I will add to my positions. If they fail I will sell them immediately. I also bought a little TQQQ. I must preserve my trading capital. So I do not marry my stocks and separate from each one immediately if it misbehaves. The fact that the market held on Monday in the face of the Greek no-vote is a sign of strength. When the market fails to go down on bad news, it is telegraphing strength. We might see a rally into earnings and then a decline into September/October as the Fed readies to raise rates. IBD notes that the put/call ratio has been holding above 1.0. Extreme bearishness among option traders is a great contrary sign of impending strength. And with an oversold 10.4 daily stochastic of 22.72 in the QQQ (up from 17 on July 2nd) , we are in the area where the QQQ usually rebounds. Hence my purchase of TQQQ, the 3X bullish leveraged ETF for the QQQ.

 

Market very over-sold; waiting until next week.

GMI

1/6

GMI-2

0/8

What is the GMI?
 

WORDEN T2108

31%

Almost one half of the Nasdaq 100 stocks have an oversold stochastics and T2108 is quite low at 31.  The QQQ has already bounced its lower BB (see daily chart below) and its stochastics is at 23 .  QQQ usually bounces when its stochastics goes below 20.  Finally, the longer term trend of the QQQ remains firmly up with an RWB pattern (weekly GMMA chart). If the market strengthens, I will commit funds after the long weekend. Earnings will be coming out in mid-July and will propel some stocks higher. Then on to dreaded October……….

QQQ07012015

QQQGMMA07012015

 

GMI Sell Signal

GMI

1/6

GMI-2

0/8

What is the GMI?
 

WORDEN T2108

29%

The GMI issued a Sell signal.  I am mainly in cash in my trading accounts. I remain invested in mutual funds in my pension accounts which I cannot trade at will.



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