Sometimes we have to look beyond US stocks. Europe is growing. Note EWG’s recent GLB. I have a small position.
Dr. Wish
Blog Post: Day 14 of $QQQ short term down-trend; Finally got the bounce, will it hold? Hint: No one knows, but the GMI =0 and RED. Check out my 10:30 weekly chart of $SPY and how I use it to analyze the market.
I have lived through many market declines since the 60s. The current decline is small and yet the omniscient media cry out that a market crash has occurred. No one knows how long the current decline will last and it is possible that it is at the beginning, rather than the end. I have to wait until Mr. Market signals the beginning of a new significant up-trend. Until then, I remain largely in cash and willing to wait. Very few stocks are reaching all-time highs, so the odds are against my profiting from buying such break-outs now. As you know, I prefer stocks trading at ATHs. There were only 8 such US stocks, out of 6100, on Friday. I always look at the list each day, however, because when the market does turn, new leaders appear among the stocks breaking out to ATHs. That is how in 2009, after the market debacle, I found GMCR making an ATH, a green line break-out, GLB, which then became a 13 bagger. Think about it. If a stock can climb to an ATH after the market has been decimated, is that stock not showing incredible relative strength? Traders knew something. GMCR was launching its Keurig coffee makers and the stock’s action told me traders knew something.
When the market turns, I will see the 10 week average of the major indexes rising above their 30 week averages. The first sign will occur if the major indexes can close back above their critical 30 week averages. See the weekly chart of SPY below. The gray line shows the weekly closes and the first sign of weakness is a close below the 30 week average, indicating a possible Weinstein Stage 3 or 4. When the 30 week average (solid red line) turns down, it tells me we are likely in a major Stage 4 decline. I know this rule seems too simple, but it has helped me to avoid huge declines when the market has swooned.
Blog Post: Day 11 of $QQQ short term down-trend; Only 6 at ATH out of 6000+ US stocks; Buying stocks at an ATH is very risky now; Stocks with a gap below their declining 10 week averages are oversold and often climb back to kiss their 4wk average before continuing their decline or bottoming; see weekly chart of $SPY
The circles in the chart show where there is a gap (a space) between the 4 wk average (red dotted line) and the week’s high. That is often a sign of an oversold stock and the declining stock will often rise to kiss its 4 wk average before continuing its decline. The opposite is true for a rising stock. Look at the gap near the top in November. All of the major indexes have a weekly high below their declining 4 wk averages. So, I am waiting for the averages to rise a little by the end of the week so I can continue unloading mutual funds in my retirement accounts. The 30 week average (red solid line) is close to curving down. This is the critical signal that has enabled me to exit stocks before major declines. Normally tops take longer to form and there will be several rallies back to the 10 or 30 week averages. But this time there may be too many people waiting for a bounce to exit. (Thank you to my stock buddy, Judy, for teaching me about the 4wk average indicator of an extended stock.)
In case we forgot: “The Smoot-Hawley Tariff Act, enacted in 1930, worsened the Great Depression by raising tariffs on imports, prompting retaliatory tariffs from other countries, and significantly reducing global trade, which further crippled already struggling economies.”
