The vicious high volume break in the tech stock short term up-trend is a major sign of weakness. The GMI is down to +2, for the first time since the decline last November. This is not the time to be brave; I must conserve my capital. I will lighten up this week, move up my sell stops, and wait to see if the decline deepens. Given that the longer term up-trend remains intact, I will not go into cash in my conservative university pension funds.
Note that there were few (<100) new highs on Friday and that the T2108 indicator is now down to 42%. Only 14% of the NASDAQ 100 stocks had their MACD above its signal line. There were only 67 new highs in my universe of 4,000 stocks on Friday…… For several weeks I have been talking about the upward channel that tech stocks (TYH) have been in. I noted when tech stocks were near the top of the channel that it was time to hold back a little. I also said that I would wait for a bounce off of the bottom to buy stocks again. However, the bounce did not come. Instead, as the chart below shows, the channel was broken on Friday. Major tech stocks like AAPL, CSCO, and MSFT declined on high volume Friday. I am therefore very cautious.