Dr. Wish

GMI: +4; QQQQ too tough to call; Some food for thought

@ 9:36 am

The GMI fell to +4 on Thursday, at the same time that the internal indicators showed some strength.  Gmi1222 Between 71-77% of the Nasdaq 100, S&P 500 and Dow 30 stocks advanced on Thursday.  There were 145 new yearly highs in my universe of 4,000 stocks.  But only 46% of the 184 stocks that hit a new high ten days ago closed higher Thursday than they did ten days ago. Buying new highs has not been likely to show a profit.  The Daily QQQQ Index is too close to call.  Thursday was the third day of this down trend (D-3), which shows signs of weakening.  36% of stocks are now in a short term up trend, up from 33% on Tuesday and Wednesday. The percentage of yearly doublers that hit a new high yesterday rose to 13%.  I am doing some nibbling, but the market is on the dividing line between up/down trend.  I am placing small bets until I can determine the short term trend.  The longer term trend remains up, with 65% of stocks above their 10 week averages.  Stocks I am watching (some of which I own) are:  HUM, MSTR, SNDK, AAPL, CHS, GOOG…………….

The great traders (Livermore, Darvas, Loeb) all suggested that one should focus on a small number of leading stocks.  I often say that diversification leads to mediocrity in stock trading.  We want to concentrate in our winners and not have them diluted by our losers.  I just read similar sentiments by William Harnisch, who wrote that diversification is the "plain vanilla of investing." Some food for thought as you mix your egg nog…..

GMI: +5; Some strengthening

@ 12:01 am

The GMI rebounded to +5 on Wednesday.  Gmi1221 There were 125 new highs in my universe of 4,000 stocks and 56% successful ten day highs.  The Daily QQQQ Index remains negative, however. Between 60-63% of the Nasdaq 100, S&P 500 and Dow 30 stocks advanced on Wednesday.  Only 33% of stocks are in a short term up trend, but other indicators were stronger. Wednesday was the 2nd day in the QQQQ down trend (D-2).  I remain in cash and on the side lines.

Have you used this site to inform your trading?  Can you send me some experiences I can post for others  (anonymously, with your prior permission)?  Please send your pearls of Wishdom to me at: silentknight@wishingwealthblog.com. 

 

GMI declines to +3; Down trend begins

@ 12:01 am

Well, the GMI declined to +3 and the new down trend has begun.  Gmi1220 Only 33% of the 359 stocks that hit a new high ten days ago closed higher on Tuesday than they did ten days earlier.  There were only 78 new yearly highs in my universe of 4,000 stocks and 84 new lows.  More new lows than highs is a serious omen. 44% of the Nasdaq 100 stocks rose on Tuesday, along with 51% of the S&P 500 stocks and 33% of the Dow 30 stocks.  Only 33% of stocks are in a short term up trend and only 6% of stocks that have doubled the past year hit a new high on Tuesday.  The leaders are stalled. I am 100% cash in my trading account.  While the indicators suggest that the longer term up trend is intact, the rally that began in October is over and Tuesday was the first day in the new short term down trend (D-1)………………

We will have to wait to find out whether this down trend turns into a longer decline. For now, the odds of making money on the long side are against us.  In fact, since the QQQQ topped out on 12/6 at a peak of 42.31, the index has declined by 2.36% and 63% of the Nasdaq 100 stocks closed lower on Tuesday than they closed on December 6.  Wonder why we have losses the past couple of weeks?  Two to one odds are just too negative for me to trade on the long side. This is a time to be on the sidelines or at least to play short stop…………….

Have you used this site to inform your trading?  Can you send me some experiences I can post for others  (anonymously, with your prior permission)?  Please send your pearls of Wishdom to me at: silentknight@wishingwealthblog.com.