I apologize to my readers for missing yesterday’s post. I was out of town and fully expected my hotel to have internet access. So much for rural seaside tourist traps….
Tuesday’s decline pushed the GMI down to a +2 reading. And on Wednesday there were only 71 new yearly highs in my universe of 4,000 stocks. Only 37% of the stocks that hit a new high ten days earlier closed higher on Wednesday than they closed 10 days earlier. The QQQQ and SPY (and DIA) have both closed below their 30 day averages, and only 32% of the QQQQ stocks are in a short term up trend. Only 6% of the stocks that have doubled in the past year hit a new high on Wednesday, further evidence that the leaders are weak. The longer term up trend is still intact with 61% of stocks above their 10 week averages and 23% within 5% of a new high. However, when the indexes close below their 30 day averages, I tend to get in cash or go short. Another sign of a weak market is that the QQQQ’s 10 day average (dotted line) is now below the 30 day average (red line) for the first time since this up trend began. While this may only be a sign of short term weakness, this is how all major declines begin. About 70-80% of stocks follow the trend of the averages–and with this pattern–I am bucking the odds if I go long………..
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