The GMI remains at zero (of 6) and the GMI-R is one (of 10).
There were 24 new highs and 174 new lows on Thursday in my universe of 4,000 stocks. In spite of the fact that Thursday was the 54th day of the current QQQQ short term down-trend (D-54), there are some signs that the market may be strengthening. First, keep in mind that we are near the end of the first quarter when mutual funds are believed to buy strong stocks to appear in their portfolios when their end of quarter reports are released. Since these reports do not show the date of purchase, the fund managers can look especially smart, even though they may have held these winners only for a few days. Second, I remember how bear markets have ended over the past 40 years and that the first stocks that people feel more comfortable buying are the big name large cap stocks. Only after a new bull market is under way and people have some profits, do they feel confident to buy the more speculative stocks. The strength I am finding in the Dow 30 stocks may be reflecting such a bias. The Dow index closed above its 30 and 50 day averages on Thursday on the largest daily volume since its bounce off of the bottom on January 23rd, and a majority of the Dow’s components are now above their 30 day averages. In addition, the QQQQ is only .13 below its 30 day average, which it has closed below all 2008, since January 2nd. Two closes above that level will signal to me a likely change in trend in the Nasdaq 100 index and tech stocks in general. And pessimism is rampant, with the Investor’s Intelligence poll now showing more newsletters bearish than bullish (45% vs. 31%, rounded–source IBD) a very rare occurrence. And the Worden T2108 indicator has rebounded to 32%, up from 19% on March 10. Finally, 56% of the Nasdaq 100 and the S&P 500 stocks have a MACD (12/30/9) that has closed above its signal line, up from below 20% on March 10.
All of these indicators suggest to me that this is not the time for me to take on new short positions. If I were short, I would place close buy stops on my positions to limit losses. Rather, I am prepared to slowly accumulate the ultra long ETF’s on the Dow (DDM), S&P 500 (SSO) or the NASDAQ 100 (QLD) indexes if their key moving averages are broached this week. Nevertheless, I have learned from trading all of these years that it does not pay to try to anticipate changes in trend. It is much safer and more profitable to wait for a confirmation that the up-trend has begun. A GMI reading above 3 would encourage me to go long. A failure to penetrate and hold the key levels I have noted would be a sign for me to move into the comparable ultra short ETFs (DXD, SDS and QID).