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The market is now very divided. My QQQQ daily and weekly indicators are still negative and in declines. The daily SPY index, however, is close to turning positive. Over 400 stocks in my universe of 4,000 stocks hit new highs today, the most since I began this blog. Between 74%-77% of the stocks in the Nasdaq 100, S&P 500 and Dow 30 indexes rose today. The GMI remains at +3 and the QQQQ is in its 7th day of the decline (D-7). Tomorrow is a critical day. We will learn whether the SPY turns positive and whether the QQQQ will follow its lead. I suspect this is the typical earnings release rally……………………………………….
I sold out my puts on the SPY at a loss, and then I immediately went long stocks. (I told you yesterday that if I find myself on the wrong side of the trend I have no problem turning on a dime. It is suicide to marry a scenario that is at odds with the market’s action.) I found so many rockets rising that I could not resist nibbling at such powerful stocks as FTO, BBY, HITK, LCAV, WFMI, HANS and MW. Of course, I put stops in on all of them in case this rally fades. I would still be much more confident if the QQQQ and SPY were in synch, but sometimes different market sectors behave in an uncorrelated fashion. Just in case, I have kept my put options on some of the weakest stocks.
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Please remember that the stock market is a risky place, especially now. I am not providing recommendations for you to follow. My goal is to share tools and methods that I have used over the past 40 years of trading, so that you may learn from them and adapt them to your trading style and needs. While I do my best, I do not guarantee the accuracy of any statistics computed or any resources linked to my blog. Please consult with your financial adviser and a mental health practitioner before you enter the stock market, and please do not take unaffordable risks in the current market environment. See the About section for more statements designed to protect you (and me) as you navigate this market. Past performance does not guarantee future results, but I would rather learn from a former winner than a loser.