Things continued to weaken on Thursday.
The GMI is still zero and there were only 15 new highs and 86 new lows in my universe of 4,000 stocks. Only 14% of stocks are in a short term up trend and only 25% closed above their 10 week averages. The GMI-S declined to 6, indicating that only one of the 16 short term indicators for the four market indexes are positive. 14% of stocks are within 5% of a new low and only 9% are that close to a new high. Thursday was the sixth day (D-6) of the current short term decline in the QQQQ. More stocks advanced on Thursday than on Wednesday; 20-26% of the stocks in the Nasdaq 100, S&P 500 and Dow 30 rose.
My puts continue to appreciate. While the pundits are looking for an end to this carnage, my stocks appear to be entering Stage 4 declines (see book by Weinstein, at right) that could last for months. That would mean that any rally will offer opportunities for more shorting. Livermore used to say the big money is made by figuring out the larger trend and staying with it until it changes. Right now the trend appears to be down for many groups. Among the groups that appear to be very weak and in which I am short are housing, utilities, cruise lines and biotechs. The key is to not be shaken out of my shorts in the inevitable reflex rally, when it comes. This weekend I will provide charts of some of my best submarine stocks.
Please send your comments to: silentknight@wishingwealthblog.com.
Eric,
I would be intrested in seeing a short intro on how to short stocks in your IRA. I am still not sure how that works. I spoke to Scottrade and they only allow covered calls. Maybe a quick intro at the next IBD meetup for us newbies.