Dr. Wish

GMI: 0; Good day for shorts; Stage 4 stocks

@ 9:52 pm

Things continued to weaken on Thursday.Gmi0518 The GMI is still zero and there were only 15 new highs and 86 new lows in my universe of 4,000 stocks.  Only 14% of stocks are in a short term up trend and only 25% closed above their 10 week averages.  The GMI-S declined to 6, indicating that only one of the 16 short term indicators for the four market indexes are positive. 14% of stocks are within 5% of a new low and only 9% are that close to a new high.  Thursday was the sixth day (D-6) of the current short term decline in the QQQQ.  More stocks advanced on Thursday than on Wednesday; 20-26% of the stocks in the Nasdaq 100, S&P 500 and Dow 30 rose.

My puts continue to appreciate.  While the pundits are looking for an end to this carnage, my stocks appear to be entering  Stage 4 declines (see book by Weinstein, at right) that could last for months.  That would mean that any rally will offer opportunities for more shorting.  Livermore used to say the big money is made by figuring out the larger trend and staying with it until it changes.  Right now the trend appears to be down for many groups.  Among the groups that appear to be very weak and in which I am short are housing, utilities, cruise lines and biotechs.  The key is to not be shaken out of my shorts in the inevitable reflex rally, when it comes.  This weekend I will provide charts of some of my best submarine stocks.

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

GMI corrected: 0 all week; we need Cramer back

@ 12:01 am

I finally got a copy of IBD and found that the IBD Growth Mutual Fund Index has been below its 50 day average all week.  So the GMI has actually been zero since Monday.  Gmi0517_1 When the growth mutual fund managers cannot make money, neither can I–on the long side.  But I have had hefty short positions in my IRA in the form of puts, for the past 2 weeks.  So Wednesday was a gift.  Only 15% of the Nasdaq 100 stocks rose along with 9% of the S&P 500 stocks and 3% (one) of the Dow 30 stocks.  There were 23 yearly highs in my universe of 4,000 stocks and 134 new lows.  Only 19% of stocks remain in a short term up trend and 28% are in a longer term up trend (above their 10 week averages).  Wednesday was the fifth day (D-5) of the current QQQQ short term down trend.  The GMI-L has fallen to 63 and the GMI-S is now at 19.  Thus, both my long term and short term indicators for the major averages have deteriorated.  I will use any rally to increase my short positions.  More stocks are within 5% of a new low (13%) than a new high (10%).  With inflation back and interest rates headed up, the markets are headed for some tough times.  When they invite Cramer back on the Today Show, this time to talk about a depressed economy and an unending bear market, it will be time to go long again.

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

GMI: +1; going to cash; on finding shorts

@ 10:39 pm

The GMI remains at +1 and Tuesday was the fourth day of the current short term decline in the QQQQ (D-4).  Only 41% of the Nasdaq 100 stocks rose, along with 33% of the S&P 500 stocks and 53% of the Dow 30 stocks.  Only 24% of stocks are in a short term up trend.  There were 42 yearly highs and 62 new lows in my universe of 4,000 stocks.  Gmi0516 I was surprised we got no bounce back on Tuesday.  My indicators have turned so negative that I transferred my pension funds out of mutual funds and into money market funds.  Maybe we should all go away in May,  until October.  My puts all rose on Tuesday.  In fact, one of my shorts, CCL, collapsed on Tuesday.  More and more, I am finding that stocks in trouble are telegraphing their declines in advance.  One needs only to read the high volume declines that they show weeks before the sudden drop.  Bad news is always hidden from the public while the insiders unload their shares (following the Enron trial?).  One must therefore look for the signs of high volume selling by the big boys in order to identify potential shorts.  If we wait for the bad news to become public before we short, we arrive late to the party…..

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