When a break-out growth stock like QCOR can reverse so quickly (see daily chart below), down 21.8% on Tuesday, it is often a sign of future market weakness. I sold my QCOR at a loss on Tuesday. CSTR, CMI, CAT, BIDU, DDD and ISRG also had declines, although smaller than QCOR’s.
The GMI-2 fell to 2 and IBD now considers the market “up-trend under pressure.” The 10 week average is now below the 30 week average for the QQQ, DIA and SPY. This is a serious sign of potential longer term weakness. In addition, the DIA and SPY both closed below their critical 30 week averages. QQQ is only .35 of a point above its 30 week average. If QQQ closes below its 30 week average, I will exit the market. I have a cardinal rule only to be in the market if it is in a Weinstein Stage 2 up-trend, defined as closing above its rising 30 week average. I am raising cash in my trading accounts and closing out any position that has not worked out the way I anticipated. If the 30 week average of the QQQ curves down, I will go to cash in my university pension.