Isn’t it interesting that after a 20% drop the media pundits finally acknowledge the “bear” market. I learned many years ago that bull and bear markets are called by the press 6 or more months after the turn. Pity the average person who waits to take action after the turn is called. On the other hand, the GMI has kept me on the right side of this market again. Note that according to my count, it has been 17 days since I identified the current QQQQ down-trend. I do not label markets as bear or bull, because such a pronouncement carries a ton of baggage regarding how long or deep such markets should be. It is far better to just label the current trend as up or down and to wait until it ends.
There were 11 new highs and 574 new lows on Thursday in my universe of 4,000 stocks. While the markets remain in a down-trend, the T2108 indicator (available from TC2007 at www.worden.com) is flashing a possible bottom or bounce. That indicator is now at 9%. With the exception of the October 1987 rout (T2108: <1%) major bottoms or bounces since then have occurred when this indicator was in the 5-8% range: 1990: 5.3%; 1994: 7.7%; 1998: 8.5%; 2001: 6.8%; 2002: 7.7%; 2007: 7.7%. With T2108 now at 9%, I am getting to the point where I might have to grit my teeth, hold my nose and buy at least a small amount of the Ultra Dow ETF, DDM. I might even just buy a few call options on DDM. If this indicator falls below 9, I will have to act.
Have you considered buying puts on DOG versus calls on DDM? For example Aug puts DOGTN and DOGTO.