Dr. Wish

GMI: 0; IBD 100 stocks bounce most

@ 6:26 am

The GMI remains at zero.  Gmi0614 For the first time since June 1, the majority of stocks in all three indexes advanced–  63% of the Nasdaq 100 stocks, 61% of the S&P 500 and 83% of the Dow 30 stocks.  There were still only 4 new highs and 245 new lows in my universe of nearly 4,000 stocks.  Only 13% of stocks are in a short term up-trend, and only 14% closed above their 10 week averages. Wednesday was the 24th day in the current QQQQ down-trend.

The comparison of my universe of stocks and the IBD 100 shows a striking difference in performance on Wednesday.  The IBD 100 stocks have been underperforming for weeks.  On Wednesday, however, Ibd0614 85% of the IBD 100 stocks advanced, compared with 57% of the stocks in my universe.  86% of the IBD 100 stocks closed above their opening price……

Usually after a severe down-trend, people are more comfortable wading into the conservative blue chip stocks;  83% of the Dow 30 stocks rose on Wednesday.  The fact that most of the very oversold IBD 100 stocks also rose suggests to me that this rise may only be a dead cat bounce.  The technical damage to the markets has been extensive and the markets would have to rise a lot more before the down-trends would be reversed.  Time will tell if that will happen.  Until then, I trade consistent with a continuing market down-trend.

Please send your comments to:  silentknight@wishingwealthblog.com.

GMI: 0; Down-trend continues; All stocks are bad, but

@ 12:01 am

Not much new on Tuesday.  The GMI is at zero.  More stocks advanced than on Monday; 35% of the Nasdaq 100, 22% of the S&P 500 and 23% of the Dow 30 stocks.  Only 9%of the Nasdaq 100 stocks are now above their 30 day averages.  Gmi0613 There were only 13 new highs and 292 new lows in my universe of nearly 4,000 stocks.  The QQQQ is now in its 23rd day of a decline.  My stats are now around the levels last seen in October, 2005, when that decline was ending.  It remains to be seen whether we are near a bottom or at the beginning of a major decline.

The IBD 100 stocks again fared worse than my universe of stocks.  Ibd0613_1 5% of the IBD 100 stock posted on 5/15 rose on Tuesday, compared with 17% of my stock universe.  However, one bright spot was that 16% of the IBD 100 stocks and 23% of my universe of stocks closed higher than they opened the day.  There were almost no new highs in both groups of stocks.  Three times as many stocks in my universe are within 5% of a new low than a new high (20% vs. 6%).  Only 15% of the stocks in my universe closed above their 10 week averages, a new low since I began recording this statistic in 2005.  Almost all of the IBD 100 stocks closed below their 10 day, 30 day and 10 week averages.  Still, twice as many IBD 100 stocks remain in a bullish stage 2 up-trend (53% vs 26%).

I remain in cash and/or holding puts on some weak stocks.  The Dow could rally some 240 points before I would consider that a new up-trend had begin.  The markets remain in a confirmed down-trend.  By now, everyone should see through the widely proclaimed conventional nonsense that stocks have intrinsic value.  Stocks are only worth what someone else will pay for them.  And each person’s assessment is driven more by mob psychology and greed and fear, than by rational logic.  How else can you explain why a stock like GS can release great earnings and be punished like it was on Tuesday.  In a down-trend, all events are seen through a dark glass that is perceived to be half empty.  Everyone sells quickly because they think that the next guy will sell. As William O’Neil says, all stocks are bad unless they are going up.  But I say that "bad" stocks can make a trader a lot of money if s/he shorts them correctly. (My TC2005 scan of the market found 232 Submarines and only 2 Rocket stocks on Tuesday evening.)

Please send your comments to:  silentknight@wishingwealthblog.com.

GMI: 0; Tech and growth stocks decimated

@ 12:01 am

The GMI remains at zero, as the market down-trend continued.  Only 9-11%of the stocks in the Nasdaq 100, S&P 500 and Dow 30 indexes rose on Monday.  Gmi0612 Only 9% of the Nasdaq 100 stocks closed above their 30 day averages, the lowest number ever, since I began counting this indicator last June.  There were 16 new highs and 157 new lows in my universe of nearly 4,000 stocks.  Monday was the 22nd day of the QQQQ down-trend.  This is the type of market that traders dream of shorting…..

Meanwhile, the IBD 100 growth stocks continue to be slaughtered.  Not a single one of the IBD 100 stocks posted to the list on 5/15 advanced on Monday.  Ibd0612 Almost all of these stocks closed below their 10 day, 30 day and 10 week averages.  Only 6 of these 100 stocks posted on the list on 5/15 closed higher on Monday than they closed on 5/15.  This means that the best and brightest growth stocks with great fundamentals are being sold off to persons looking for "bargains."  The great trader, Jesse Livermore, used to say that it was amazing how much stock could be distributed to the public on the way down.  Severe down-trends typically end when the public loses its appetite for low priced bargain stocks, way down from their highs.  When I go long, I want to buy stocks heading to the moon, not fizzling rockets falling back towards the earth.  Even the great HANS and AAPL are starting to show signs of a down-trend.  According to the TC2005 scan of my stock universe, there are only 5 possible Rockets and 205 Submarines.  It will take more than a sharp rebound to convince me to abandon my shorts and to buy stocks again.

Please send your comments to:  silentknight@wishingwealthblog.com.