Dr. Wish

The GMI held at +6 and the Dow 30 stocks were strong in the face of a weak tech sector, led by the GOOG decline.  77% of the Dow 30 stocks advanced on Wednesday, but only 60% of the Nasdaq 100 and 58% of the S&P 500 stocks advanced.  The GMI-L remains at 100 and the GMI-S reclaimed the 75 level.  My remaining indicators were level or stronger.  Wednesday was the fourth day in the short term QQQQ up trend (U-4)……….

In spite of this strength in the internal market indicators I remain somewhat defensive in view of the weakness in some of the market leaders.  The abrupt fall in GOOG shows the potential weakness of a stop loss order in a sudden gap down.  Persons with a close stop loss order on GOOG would have been hurt by the fact that GOOG opened Wednesday at 389.03, way below Tuesday’s close of 432.66.  For example, a sell stop at 429 would have been executed somewhere around 389.  The problem is not with stop orders–they provide necessary, though imperfect protection against a large loss. The problem is in holding a stock when it is about to announce earnings–especially if it has already risen a lot and other stocks are getting slaughtered even after releasing decent earnings…..

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

The GMI remained at +6, but the market was weaker Tuesday.  Only 44% of the Nasdaq 100 stocks rose, along with 37% of the S&P 500 stocks and 30% of the Dow 30 stocks.  There were 375 yearly highs in my universe of 4,000 stocks, down from 414 on Monday.  Tuesday was the third day in the QQQQ short term up trend (U-3). However, the GMI-S declined to 69 because of more weakening in the DIA indicators.  I mentioned yesterday that I wanted to see how the market reacted to GOOG’s earnings.  In extended trading the stock was down over 50.  The decline in AAPL and GOOG post earnings tells me more about the health of the market than the health of these two leading stocks.  If the strongest stocks weaken, the rest of the market will follow suit.  So, I am raising my stops and remain on the defensive.  The indicators are beginning to look toppy to me……

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

The market held steady Monday, as did the GMI, at +6.  There were only 106 successful 10 day new highs–stocks that hit a new high 10 days ago and closed higher on Monday than they did 10 days ago.   The number of new highs declined to 414.  Only 40% of the Nasdaq 100 stocks rose, along with 42% of the S&P 500 stocks, 33% of the Dow 30 stocks and 44% of the S&P 600 small cap stocks. There were no changes in the GMI-L or GMI-S.  Monday was the second day in the QQQQ short term up trend (U-2)…..

The way the market reacts to GOOG’s earnings release Tuesday  will probably tell us a lot about the market’s near term health.  Also, the chart of the short term interest rate index shows that traders see no end in sight to the rise in rates.  The Fed will surely accommodate them on Tuesday.  I would be much more optimistic about this market if the QQQQ could take out its January 11 peak. 

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