Dr. Wish

GMI: 0; GMI-R: 1; T2108: 11%; 60th day of QQQQ short term down-trend

@ 7:05 am

The GMI remains at zero (of 6), but the more sensitive GMI-R rose to 1 (of 6).   I do not typically identify a tradeable up-trend until the GMI is at least 3, and this market is still a long way from a real up-trend signal.   Monday was the 60th day of the current short term down-trend in the QQQQ. There were 3 new highs and 99 new lows in my universe of 4,000 stocks on Monday.

GMI: 0; GMI-R: 0; S&P500 double top or market bottom?

@ 12:01 am

The GMI and GMI-R remain at zero.   There were 21 new highs and 1835 new lows in my universe of 4,000 stocks on Friday.   The number of new lows was down from 2185 on Thursday.  GMI1121

The Worden T2108 Indicator rebounded from 5% to 7%, and is still in what used to be indicative of an imminent bottom.   Friday was the 59th trading day (D-59) since I identified the beginning of the current short term down-trend in the QQQQ.   Since that day (September 2) the QQQQ has declined 41%.   During that time, 99% of the Nasdaq 100 stocks (all but APOL–the proverbial needle in the haystack–sought by those addicted to the bullish side) have declined, and 44% have declined 50% or more. Even if we had missed the initial sell signal and waited until a failed bounce on September 19, still, 99% of the Nasdaq100 component stocks have declined since then, one half by more than 41%.   So you see, one could have missed the first sell signal by about 2 weeks and still have saved a lot of money by going into cash or short. Who knows?   Maybe it is still a good time to go to cash…

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GMI: 0; GMI-R: 0; T2108: 5%; In context of market history, current decline minuscule

@ 10:06 am

My General Market Indicators (GMI, GMI-R)   remain at zero.   There were only 23 new highs and 2185 new lows in my universe of 4,000 stocks on Thursday.   On October 10, there were 2832 new lows, so this decline has not eclipsed the number of new lows set at the October low.   The Worden Indicator is back to 5%, a level where prior bottoms occurred.   On October 10, it was at 1%.   Since 1986, the level was lower only once, in October, 1987, when it hit 0.5%. The T2108 indicator measures the percentage of NYSE stocks above their simple 40 day moving average.   It used to be a reliable indicator of when the market reaches tops (above 70%) and bottoms (below 20%).

When we take a step back from the current hysteria and look at the Dow Index each year in perspective, an amazing fact comes out.

DOWHISTORY As this yearly chart shows (it tracks each year back from the current day and does not correspond exactly with a January to December calendar) the current decline in the Dow appears minuscule when compared to the one in 1929-1932.   The 1987 decline does not register much and the 1974 decline just touches the 30 year moving average trend line (red line).   In fact, the current decline is well above that trend line. So, we may not be near a bottom today or this year……….. The great temptation that we all face is to buy the bargains and look for a bottom.   If I have learned anything from studying the great traders of the past (Livermore, Baruch, Darvas, O’Neil) it is that one cannot predict the market, only ride the current trend until it ends.   Thursday was the 58th day since I labeled the beginning of the current QQQQ short term down-trend on September 2nd.   For me, the trend is still down, so I remain in cash with a few short positions.

Thank you, Beth, for the vote of confidence.   I also want to acknowledge that Beth independently made similar comments about the Dow’s history on her email to the members of her local trader’s meetup.