GMI:3+; GMI-R: 4+; BEGINNING a major decline?; Mainly in cash
Well, the QQQQ finally got in synch with the rest of the market on Thursday. There were 519 new lows and 89 new highs in my universe of 4,000 stocks. The last time we had as many new lows was on August 16 (556) at the bottom of last summer’s decline. But wait a minute. The QQQQ is just about to break its up-trend–Thursday is its first close below the critical 30 day average since August 28. I usually wait for one more such close to turn my Daily QQQQ indicator negative, hence the GMI and GMI-R readings with a "+. " And the IBD growth mutual fund index has just closed on its 50 day average and could pierce it today. In addition, the Worden T2108 indicator is still above bottoming territory (now 31% versus 11% last August) and 26% of the stocks in my universe are in an up-trend compared with just 11% at the bottom in August.
All of these indicators are clearly above the extreme low readings that we had last August, suggesting to me that this new decline in the QQQQ may turn vicious and do a lot more damage than we experienced during last August’s decline. I therefore sold everything on Thursday and bought a little of the QQQQ inverse ETF, QID, that rises twice as much as the QQQQ falls. This is the time for me to be on the side-lines, mainly in cash.
GMI: 5; GMI-R: 60%; QQQQ breakdown coming?
Well, the split market we have been talking about may be about to end–but not yet. The GMI is still 5 but the GMI-R is at 60%. 
The QQQQ is right on support and another decline could turn my indicators negative. Tuesday was the 49th day of the current QQQQ up-trend. The QQQQ has closed the past 10 weeks above its critical 10 week average, but the SPY is now below its 10 week average. Only 13% of my 16 short term indicators for the QQQQ, SPY, DIA and IJR are positive. The Worden T2108 indicator is now down to 31%, in bear territory for NYSE stocks.
So, what to do? I took some funds off the table today. Why try to be a hero when so many of the banks and large financial stocks and the dollar are in trouble? Look for a put/call ratio (1.03 Wednesday in IBD) well above 1.0 for a short term bounce.
GMI:4; GMI-R: 6; Strongest stocks
The GMI fell one, to 4 and the GMI-R to 60%. There were 101 new highs and 381 new lows in my universe of 4,000 stocks on Monday. The QQQQ continues to resist the down-trend in the non-tech markets. Silver, gold and commodities are hitting the new high list. The QQQQ is in its 47th day of its short term up-trend. You can cut the negativity espoused by CNBC pundits with a knife, and yet the markets rebounded from their lows on Monday. This market therefore looks like it wants to rally. Key growth stocks (GOOG, AAPL, CMG, RIMM, BIDU) are holding up. On the other hand, the Worden T2108 indicator is now at 36%, reflecting a lower market for NYSE stocks. Among the 101 stocks in my stock universe that hit a new high on Monday and that have recent quarterly earnings increase of 100% or more are: ENZN,NDAQ,HAE,RIG,PSEM,HL,VCP,BIDU,FLS,CELL,ATRO,
ANSS,NEM,RIMM,ITC FMCN. If the market does rally, these stocks may be among the new leaders.
GMI: 5;GMI-R: 7; Split market continues
The GMI fell to 5, and the GMI-R is now at 70%. There were 351 new lows and 133 new highs in my universe of 4,000 stocks on Friday. Meanwhile, the Daily SPY Index has turned negative even as the QQQQ remains in the 46th day of its current short term up-trend. 10% of the Nasdaq 100 stocks rose, somewhat better than the 3% of the S&P 500 and the Dow 30 stocks. But the Worden T2108 indicator is now 42%, the lowest level since it topped at 82% on October 5th. This pendulum of the NYSE stocks is now heading towards bearish territory and does not typically bottom out until it declines to below 25%. Nine stocks from the IBD 100 list published on October 15 hit new highs on Friday: FMCN,BIDU,CTRP,CLB,ABB,TEF,HDB,HMSY,SYNA. But when I look at the industries represented in the new low list, I am struck by the major weakness in housing, bank and apparel stocks. How long can the techs buck these trends? I am still holding QLD, but will sell out if the GMI falls below 3.
GMI: 6; GMI-R: 90%; Split market
The GMI remains at 6 and the GMI-R fell one, to 9 (90%) because there were more new lows than highs in my universe of 4,000 stocks on Thursday. Remember, the GMI tracks the Nasdaq 100 stocks most closely. We have had a miserable performance in the Dow 30 S&P 500 and SmallCap stocks and still have the GMI remain strong because the Nasdaq 100 techs stocks are outperforming these other stocks. How long this schizophrenic, split personality of a market can last is anyone’s guess. For now, the Nasdaq 100 tech stocks remain stronger and are in the 45th day of their short term up-trend. So, I retain the QLD and my covered call positions…….
GMI: 6; GMI-R: 10; 17 IBD100 stocks at new highs
The GMI is at the maximum of 6 and the GMI-R is at 100%. There were 326 new highs and 85 new lows in my universe of 4,000 stocks on Wednesday. 83%-93% of the stocks in the Nasdaq 100, S&P500 and Dow 30 indexes advanced. Seventeen of the stocks on the IBD100 list from October 15 hit a new high: MA,HDB,ATW,CMG,POT,RIO,SYNA,SID,SDA,FMCN,GOOG, AAPL,AIRM,MBT,ABB,TEF, and PAY. Wednesday was the 44th day of the current QQQQ short term up-trend. I am mainly in the QLD and holding stocks on which I have written calls.
GMI:6; GMI-R: 10; In QLD and covered calls
The GMI remains at 6 (of 6) and the GMI-R is at 100%. There were 175 new highs and 91 new lows in my universe of 4,000 stocks on Tuesday. Tuesday was the 43rd day in the current QQQQ short term up-trend. I am invested in the QLD and in a number of covered call positions.
GMI: 6 (of 6); GMI-R: 10 (of 10); Riding the up-trend; IBD 100 winners
The GMI returned to a maximum reading of 6 and the GMI-R is now 100%. There were 377 new highs and 78 new lows in my universe of 4,000 stocks on Monday. Monday was the 42nd day in the current QQQQ short term up-trend and I have a large position in the QLD, which mimics the QQQQ. I am also writing covered calls again on rising IBD 100 stocks. I pay attention to the movement of the market and ignore the pundits and the news. When a car is heading towards me I don’t argue with it or complain that it is not supposed to be there. I must react to what is occurring. Similarly, I must ride the current market up-trend until it changes. And we are approaching the time of the year (November to April) when most market gains have occurred…….
One third of the stocks on the IBD 100 list published on October 15 hit a new high on Monday. Among these, the largest gainers were: FMCN, FTK, EDU, DSX, DRYS, VIP, CTRP, HDB, CMED, and RIO. These ten stocks each rose 4% or more on Monday. Note that while 33% of the IBD100 stocks from October 15 hit a new high, only 8% of the Nasdaq 100 stocks and 7% of the S&P 500 stocks did so. Who said that stocks play dead after they appear on the IBD100 list???!!
See my disclaimers below.
GMI: 4; GMI-R: 8; GMI performance; Judy’s pick: CYTR
The GMI fell one, to 4, as my 10 Day Successful New High Index turned negative–barely. (Click on Table to enlarge.) 
This index measures the number of stocks that hit a new high 10 days ago that closed higher than they did 10 days earlier. (In a strong market, stocks should rise after hitting new highs.) The GMI-R also fell one, to 80% for the same reason. If the SPY holds its own on Monday, the Daily SPY Index will turn positive. The QQQQ is in the 41st day of its short term up-trend and the QQQQ and SPY have closed above their 10 week averages for 7 weeks. (I typically make money trading growth stocks when the QQQQ is consistently above its 10 week average.) The longer term trends are strong, with the GMI-L now at 94%. The Worden T2108 indicator is now back to 55%, up from its recent low of 44%….
The GMI continues to do its job of defining the QQQQ trend. I will trade long in the market as long as the GMI is greater than 2. 
(Click on chart to enlarge.) I continually have to learn the lesson that if I would just ride the QQQQ up-trend by holding the Pro Shares Ultra-QQQQ ETF, QLD (the QLD aims to rise or fall twice as much as the QQQQ), I can virtually outperform every other strategy I am likely to pursue. Thus, since the GMI turned 3, on August 31, the QQQQ has risen 10.35% and the QLD by 20.07%. How many of us have had their portfolio rise more than 20% in this time period, with a single trade? Since August 31, only 19% of the Nasdaq 100 stocks and 7% of the S&P500 stocks have risen more than 20%, along with 34%of the stocks on the IBD100 list published on August 18. We would have had to have been pretty lucky to select an entire portfolio of individual stocks that would have outperformed just sitting in the QLD! So many traders are interested in being right (proving their strategy or that they are smart), instead of just making money. I continually have to resist falling into this trap…..
As I have written before, my friend Judy is an excellent stock picker who thoroughly researches a stock and only buys it after she has fallen in love with its concept. Well, Judy recently told me about a stock in the promising RNAi field. You can look up this exciting technology yourselves by going to the company’s home page. Well, I don’t like cheap stocks and I always subject Judy’s picks to my own technical analysis before I buy. 
She buys at much lower prices than I do and amusingly watches others buy at higher levels as brokerage analysts discover her picks. So Judy told me about CYTR, which I did buy around $3.50. The stock closed Friday at $4.65 up 12.59% for the day and 28.45% for the week! CYTR has a lot of technical strength, so I thought I would share it with you, not as a recommendation, but to show you some signs that I look before I buy a stock. (Click on chart to enlarge.) The weekly chart shows that CYTR has now closed above its 30 week average (red line), a critical buy signal for me. It is also coming off of a nine month base that came after a huge rise. As you know, I like to buy stocks that have already doubled, and CYTR is up 250% in the past year. And other RNAi stocks (ALNY, ISIS) are strong. If CYTR’s clinical trials prove successful and the stock becomes a big winner, I will have plenty of time to average up as the stock climbs….
GMI:5; GMI-R: 9; Still mainly in cash
The GMI rose to 5 (of 6) and the GMI-R to 90%. There were 189 new highs and 165 new lows in my universe of 4,000 stocks. But my very short term indicators look horrendous with only 13% being positive. A close of the QQQQ below 52 would be a serious break in support. If the bounce in the QQQQ from MSFT’s rise does not keep the QQQQ up on Friday, I will become very defensive. Something about this market really bothers me. Can techs continue to resist the downward momentum in the other stocks? Or will another reduction in interest rates by the Fed next week bring them all back? I still think the best place to be right now is mainly in cash.
