Wednesday was the 10th day of the current decline in the QQQQ. The GMI and GMI-R are both zero and there were 441 new lows and 38 new highs in my universe of 4,000 stocks on Wednesday. The Worden T2108 indicator is 27%, still above the levels typical of past bottoms. I remain in cash with a few puts in my IRA.
Dr. Wish
GMI:0; GMI-R:0; 9th day of QQQQ down-trend; Cramer says stay in the market for 20 years
Well, the GMI and GMI-R continue to register zero. There were 500 new lows in my universe of 4,000 stocks on Tuesday, and 28 new highs. On January 9, there were 1,011 new lows, so the current decline has not created as much damage thus far. Nevertheless, since the start of this down-trend on January 3, the Nasdaq 100 index has fallen 8% and 83% of the Nasdaq 100 stocks have declined, 31% have declined 10% or more. Ten of the stocks have fallen 18% or more, including past leaders such as RIMM, ISRG and GRMN. You can see why it does not pay to fight the trend of the index (QQQQ). It also shows the wisdom of using stop loss orders to preserve gains. When the leaders like GOOG (-7%) and even AAPL (-13%) begin to falter it presents ominous signs for the rest of the market.
Nicolas Darvas was right when he wrote that it is folly to remain in a bear market and to thereby surrender one’s precious bull market profits (see my post on Darvas on last Monday, 1/14). And what did Cramer say to his viewers tonight about the market? Because there has never been a 20 year period when the market did not gain, people should remain in the market! So, we should all stay in this market knowing that our money will probably be worth more in 20 years—masochists rejoice!
GMI:0; GMI-R:0; Earnings bounce; cash is king
The GMI and GMI-R remain at zero. On Monday, there were 69 new highs and 189 new lows in my universe of 4,000 stocks. Thank you for the nice comments about yesterday’s post about Nicolas Darvas. It appears we are finally getting the earnings bounce. The key is whether this rally in the QQQQ can break above the last peak at 52.63. Monday’s rally came on relatively low volume and may turn out to be a dead cat bounce. We may have to wait for earnings season to be completed before this market reveals itself. The winning strategy for me is to react after a turn and not to anticipate one. For now, cash is king.