Dr. Wish

QQQQ down-trend continues; Amazon kindles an impressive gain

@ 9:08 pm
GMI0/6
GMI-R1/10
T210812%

There were 3 new highs and 106 new lows in my universe of 4,000 stocks on Wednesday.   The QQQQ completed the 17th day of its short term down-trend.   It would have to rise a lot more to begin a new up-trend.   Still, I cannot resist buying an occasional strong stock during a counter trend rally. One stock I own a little of is AMZN, a stock championed by Judy.

AMZN had a huge gap up on January 30th when it beat earnings estimates, then consolidated for several weeks.   (Looks like a head and shoulders bottom?) Today, AMZN appears to have broken out again.   AMZN has a great new product in the Kindle 2 digital reader.

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T2108 calls bounce again! Will rally hold?

@ 8:13 am
GMI0/6
GMI-R1/10
T210811%

The T2108 was in single digits for six consecutive days before Tuesday.   Anytime this index is below 10, the market is oversold and   it is a good time to look for a rally.   There were 6 new highs and 148 new lows on Tuesday in my universe of 4,000 stocks on Tuesday.   Tuesday was the 16th day of the current short term down-trend of the QQQQ.   It may take weeks before we find out whether Tuesday’s rise will hold.   The GMI-R is now up to one (of 10). Perhaps the safest approach for me now is to take on some long positions and buy some puts for insurance, the strategy I described in my prior post.

How I use put options as investment insurance

@ 8:01 pm
GMI0/6
GMI-R0/10
T21087%

There were 7 new highs and 1,221 new lows in my universe of 4,000 stocks on Friday.   The QQQQ completed the 14th day of its short term down-trend within a longer term down-trend. I heard on Fast Money that the AAII survey has the most bearish reading ever.   Furthermore, the momentum indicator in IBD for the Nasdaq 100 index futures is below 25%, the place from which   rallies tend to begin.   And with the T2108 at 7%, in deeply oversold territory, I am becoming reluctant to add more shorts right now.

Last week, a person who knows nothing about the market asked me how to short stocks.   This is reminiscent of the   stories of the shoeshine boys providing stock tips, near the roaring 20’s market’s top.   The sentiment is just too negative right now.   Does this mean the market has to turn up?  

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