The GMI is still at 1, but with 2 indicators very close to turning positive, signified by a "?." One more day with the QQQQ or DIA closing higher than they closed on Friday will turn their respective daily indicators positive. That would get the GMI to 3, and 100 or more new highs on Monday would get it to 4. Even the IBD Growth Mutual Fund Index is within striking distance of turning positive.
I know I have said that its is bad to anticipate market moves. But typically, when my gut says that a particular move is impossible, it is time to begin considering that that move may take place. It seems impossible to think that the market will turn and move on to new highs right away. And yet, that is what might occur. First of all, too many pundits are skeptical of this rally. Second, the investment newsletter sentiment is now 40% bullish and 37% bearish. The bearish percentage has doubled from its recent lows and is usually a great contrary indicator. Third, the Worden T2108 indicator (% of New York stocks above their 40 day averages) signaled a bottom around 8% and is now back to 30%. This market pendulum is moving back towards bullish and will top out typically around 80%. Fourth, I have learned I should not fight the Fed–it always prevails. And finally, the QQQQ and SPY ETF’s are now above their 10 week averages. I have the greatest success being long when the QQQQ is above its 10 week average.
So, when I look over this landscape, it suggests to me that the worst may be over and that I should close out my short position and look for a opportunities to go long. If Monday’s market moves up, I may begin to phase into QLD. Also, a lot of growth stocks are rebounding, including GRMN, CMG and AAPL. I may write some September covered calls if the GMI increases to 4.
The QQQQ is now above its 30 day (red), 10 day (dotted line) and 10 week averages, a very good sign. The daily MACD (blue) is also above its signal line (red). The Daily and Weekly QQQQ indexes are now positive. The QQQQ is also stronger than the other indexes I follow: SPY, DIA and IJR. I am beginning to write covered calls on strong IBD 100 stocks. Still, there were only 37 new highs and 28 new lows in my universe of 4,000 stocks on Thursday. Small bets are best for now, until the GMI rises to 4.
