Well, the QQQQ finally got in synch with the rest of the market on Thursday. There were 519 new lows and 89 new highs in my universe of 4,000 stocks. The last time we had as many new lows was on August 16 (556) at the bottom of last summer’s decline. But wait a minute. The QQQQ is just about to break its up-trend–Thursday is its first close below the critical 30 day average since August 28. I usually wait for one more such close to turn my Daily QQQQ indicator negative, hence the GMI and GMI-R readings with a "+. " And the IBD growth mutual fund index has just closed on its 50 day average and could pierce it today. In addition, the Worden T2108 indicator is still above bottoming territory (now 31% versus 11% last August) and 26% of the stocks in my universe are in an up-trend compared with just 11% at the bottom in August.
All of these indicators are clearly above the extreme low readings that we had last August, suggesting to me that this new decline in the QQQQ may turn vicious and do a lot more damage than we experienced during last August’s decline. I therefore sold everything on Thursday and bought a little of the QQQQ inverse ETF, QID, that rises twice as much as the QQQQ falls. This is the time for me to be on the side-lines, mainly in cash.
I sold all remaining equities Thurs as well – The QQQQ breaking down was catalyst – been waiting for it either way – It followed market . Banks are leading this destruction . Till they turn , I’m out .Am adding to TIPS – VIPSX on an ongoing basis – Have done better with them in last 6 months , then equities for the whole year .
Bill