The GMI has fallen to 4 for the first time since March 20. If the QQQQ fails to hold 46, the GMI will likely slip below 4, the point at which I begin to get defensive. There were only 77 new 52 week highs in my universe of 4,000 stocks on Friday. The Worden Indicator T2108 (% of stocks above their 40 day averages) is now at 56%, down from a high of 80% in April. The pendulum is thus swinging down, and whether it reverses before it reaches a market low below 25% is anyone’s guess. My similar indicator which tracks the percentage of Nasdaq 100 stocks closing above their 30 day a
verages, is now at 49%, down from above 80% in late April, the lowest it has been since last March when the percentage was rebounding from a low of 11% in early March before the current rally began. So, we have some signs that this market is weakening. In addition, the MACD for the daily QQQQ is declining below its signal line and the MACD for the weekly QQQQ has failed to confirm the latest peak in that index. All of these indicators make me nervous about this market and I will watch it closely for signs of a crack. The key is to not jump the gun, but to wait for the market to change direction. For now, the trend is still up.
