Dr. Wish

Wednesday brought a bounce from oversold levels.   Wednesday was the 3rd day of the QQQ short term down-trend. I am more confident of a change in trend once it reaches 5 days. I remain mostly in cash with all of my long positions protected by put options.

The GMI has fallen to 1 for the first time since last March.   The IBD Mutual Fund Index is now below its 50 day average, a major negative sign for me.   I cannot make money on the long side when these growth mutual funds do not do well.   I am therefore   mainly in cash in my trading accounts, with my few long positions protected with put options. The key to success in the market is to lose little money when the odds are against me.   There is a time to be out of the market, ready to jump in if the trend reverses.   Tuesday was the second day of the new QQQ short term down-trend.   I remain fully invested in mutual funds in my university pension because the longer term trend remains up—for now.

I am in cash and/or totally hedged in my trading accounts.   In a market   like like this it is better to be safely on the sidelines. All of my great gurus have written that there is a time to be out of the market.   My university pension remains fully invested, however. I only move that money out of equity funds when the longer term trends turn down.

The Worden T2108 indicator is now around 41% (40.5), but way above where prior significant declines typically end.   See the weekly chart of T2108 below.   It measures the percentage of all NYSE stock that closed above their 40 day simple moving average. Click on chart to enlarge.