Dr. Wish

GMI: 5; GMI-S: 31; The Dow’s dirty little secret;

@ 12:01 am

We  keep hearing about how the Dow is at an all-time high.  I looked at the price range of the 30 Dow stocks since the bubble top in 2000.  Was I surprised to find that only 10 of the 30 stocks (33%) surpassed their 1999/2000 top in 2006:  CAT, XOM, BA, AXP, JNJ, MO, C, UTX, MMM and PG.  The fact that the Dow 30 average reached an all time high in 2006 is meaningless when 20 of the 30 stocks never got above their 1999/2000 bubble peaks!  It all boils down to media hype to get unsuspecting investors to enter this record high market …

Meanwhile the GMI closed on Friday at 5 but the GMI-S fell 19, to 31. Gmi1229_1 With the media talking about another great year, it is interesting that my short term indicators for the Nasdaq 100 stocks and the S&P 600 Small Cap stocks are all negative.  Only 18% of the Nasdaq 100 and S&P 500 stocks rose on Friday, along with 23% of the Dow 30 stocks.  Just 33% of the Nasdaq 100 stocks have closed above their 30 day averages.  Only 18% of the IBD 100 list from 12/18 advanced and only 29% closed higher than they did on 12/18.  Friday was the 7th day in the current QQQQ down-trend.

So, rather than try to predict the market, we need to look at what the market is doing now.  The Nasdaq 100 stocks clearly are in a short term down-trend.  The past leaders, RIMM, AAPL and GOOG, all look tired, and it has been several weeks since they hit new highs. Since the QQQQ hit a new high on 11/24, it has fallen 3.34% and 63% of the Nasdaq 100 stocks have declined.  In fact, only 26% of the Nasdaq 100 stocks are up 1% or more since 11/24.  With odds like these, I am mainly in cash and ready to accumulate more QID if the QQQQ continues to weaken.

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GMI: 5; Happy New Year!

@ 12:01 am

The GMI remains at 5 and the GMI-S is at 50.  Only 35% of the Nasdaq 100 stocks rose on Thursday, along with 32% of the S&P 500 stocks and 43% of the Dow 30 stocks. Gmi1228_1 There were 231 new 52 week highs in my universe of 4,000 stocks.  Thursday was the 6th day in the current QQQQ down-trend.  The Nasdaq 100 stocks and the Dow 30 stocks are clearly on different tracks.  It remains to be seen next year which of these indexes will lead the market.

Happy New Year to all of my readers, and I hope to see you back next year.  Please see my disclaimers at the bottom of yesterday’s post. 

GMI: 5; AAPL; IBD 100 stocks stronger than Nasdaq 100; window dressing?

@ 8:38 am

I guess we all know why AAPL has been weak.  See the beauty of technical analysis?  The bad news was evident in the stock movement long before it was revealed to the rest of us….

The GMI remains at 5, as the major indexes recovered.  72% of the Nasdaq 100 stocks rose on Wednesday, along with 84% of the S&P 500 stocks and 97% of the Dow 30 stocks.  Gmi1227 There were 306 new 52 week highs on Wednesday and only 7 new lows in my universe of 4,000 stocks.  Still, the QQQQ remains in a downtrend; Wednesday was the 5th day of the current down-trend. The GMI-S is back to 50, but none of my short term indicators for the QQQQ are positive.  We will need to see the end of the 4th quarter mutual fund "window dressing," before we know if this rally is for real.  For now, I remain cautious and skeptical.

An interesting difference in strength occurred on Wednesday in the Nasdaq 100 stocks and the IBD 100 stock lists that I follow.Ibdperf1227 90% or more of the IBD 100 stocks rose on Wednesday, compared with 72% the Nasdaq 100 stocks.  More of these IBD 100 stocks hit new highs and they were more likely to close above their 30 day averages.   It sure looks like the fast growing type of stocks selected for  the IBD  100 lists are outperfoming the Nasdaq 100 stocks right now.  Growth stock window dressing by the mutual funds who want to include the winners in their end of year portfolio statements?  What a great way to look smart, given that the funds fail to disclose the price and date of their acquisitions during the prior quarter….

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