The GMI is down to 4 and could fall to 2 tomorrow with another down day. The GMI-S is down to 13. There were only 56 new highs and 84 new lows in my universe of 4,000 stocks. Two indicators are too close to call (?), so I left them positive. Tuesday was the 59th day of the current QQQQ up-trend and it would not surprise me to see a new down-trend. The QQQQ has closed above its 10 week average for 12 weeks. The SPY is now below its 10 week average. The Worden T2108 indicator shows 34% of stocks above their 40 day average, far from the 80% peak in April, but not low enough to where declines typically end, around 25%. So, this decline could have more to go…..
I was bloodied by IOC on Tuesday. The stock fell 30% and evaporated many of the gains I had achieved by selling high premium calls on it the past two months. This was an important lesson about not being too greedy on such bets….
I still suspect we will have an earnings rally in July. The put/call ratio was over 1 on Tuesday, a bullish sign because options players are betting on a decline. However, if the GMI continues to weaken, I will go to cash and purchase QID or SDS to make money on the short side.