Dr. Wish

All indicators negative; 12th day of QQQQ short term down-trend

@ 6:03 am
GMI0/6
GMI-R0/10
T210838%

All of my indicators have turned negative again and I am back to cash.   I have considered buying some QID, but with my short term moving averages being flat, I will probably get repeatedly whipsawed as the indexes move above and below their averages.   However, at some point a real tradable trend will develop. There were 3 new highs and 138 new lows in my universe of 4,000 stocks on Friday.   Only 30% of the Nasdaq 100 stocks closed above their 30 day averages and the QQQQ   just completed the 12th day of its short term down-trend.

One of the GMI’s components tracks the percentage of “successful” stocks that hit a new high 10 days ago that closed higher today than they closed 10 days ago.   It is a useful indicator to see if break-out stocks are continuing to advance.   This indicator has been negative since late October,   largely because we rarely saw the required 20 new highs in a day.   You can see this indicator is still negative in the GMI table below….

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GMI: 1; GMI-R: 4 T2108: 61%

@ 12:43 am
GMI1/6
GMI-R4/10
T210861%

The GMI rose to 1 (of 6)   and the more sensitive   GMI-R to 4 (of 10).   There were 5 new highs and 21 new lows in my universe of 4,000 stocks on Wednesday.   The QQQQ will change to a short term up-trend, if it holds on Thursday.   I sold my QID and bought a little QLD.   I will accumulate QLD (the ultra long QQQQ ETF) if the up-trend gets going. The key is to start with a small pilot buy and to increase my position only if the trend continues. I also set close stops in case the trend weakens.   In this way I have the greatest position (and risk) only after the movement is consistent with my initial   purchases.   I learned this strategy from the great Jesse Livermore (see Reminiscences book by Lefevre below), who made small pilot buys and then pyramided up only if the market confirmed his judgment. I never add to a losing position.   I hope to get in on a trend that will last for weeks or months, not minutes or days.

GMI: 0; GMI-R: 1; T2108: 48%

@ 8:30 am
GMI0/6
GMI-R1/10
T210848%

The GMI-R rose to one on Wednesday.   The QQQQ completed the 9th day of its short term down-trend.   However, the QQQQ is just below its critical   moving average.   A rise from here could turn the short term trend positive.   The market seems able to hold up under a flood of bad earnings.   So, the selling may be done for now.     This appears to be a time of considerable back and forth in the market.   I remain mainly in cash.