Dr. Wish

There were 381 new 52 week highs and only 24 new lows in my universe of 4,000 stocks on Wednesday.   Wednesday was the 46th day of the QQQQ short term up-trend. With so many daily highs, and the GMI at 6, it looks to me like it is possible to go long stocks near new highs again.   It will be interesting to see whether NFLX will hold on to its post-earnings rebound.   Both AAPL and GOOG did not.   I am still more cautious than usual, given my concerns about the municipal bond crisis.   See this interview with George Soros. AGO, the municipal bond insurer,   has been a good short, but has declined for 7 straight days.   A lot of the stocks that I follow are now rebounding from   oversold levels (CAVM, RVBD, PANL, APKT, CF, NTAP, VIT, BHP, ARMH BIDU, TDSC, OPEN, KKR). The key is whether they can climb back above their recent peaks.   A strategy I like is to buy a small amount of a rebounding stock and to place a stop loss order below its recent support level. In that way, I can participate with minimal risk if it resumes its decline.

The key to this market for me is whether AAPL and GOOG can go on to new highs.   (See daily chart of AAPL below.) Each fell from their peak on high volume last week after earnings were released and are now rebounding on lower volume.   I am cautiously awaiting the outcome.   Meanwhile, a lot of the key small cap tech stocks have broken their short term up-trends.   There were only 128 new 52 week highs in my universe of 4,000 stocks on Tuesday.

The GMI and GMI-R are back to their maximum values but I remain cautious.   By the way, check out AGO, the insurer of municipal bonds, which I have been writing about as a short candidate since last week. See daily chart below (click on to enlarge). For a context read this about possible changes in state bankruptcy laws. AGO insures municipal bonds.