Dr. Wish

The GMI rose to +3 on Wednesday because there were 101 new highs in my universe of 4,000 stocks.   There were also 100 new lows, demonstrating how ambivalent this market is.  32% of the Nasdaq 100 stocks, 35% of the S&P 500 stocks and 47% of the Dow 30 stocks advanced Wednesday.  21% of stocks are now in a short term up-trend, up from 8% on October 18.  One third of stocks are now above their 10 week averages, up from 21% on October 13.  Nine of the 14 stocks that hit a new high 10 days ago closed higher than they closed 10 days earlier.  While this represents 64% successful 10 day new highs, the numbers are so small that I kept this indicator negative.  Nevertheless, it suggests that buying new highs ten days ago had a better than even chance of proving profitable. Wednesday was the third day (U-3) in the QQQQ up-trend.

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The GMI declined to +2 on Tuesday.  This is because there were just fewer than 100 new highs (97) and there were not enough (just 16) successful 10 day new highs–stocks that hit a 52 week high 10 days ago and closed higher on Tuesday than they did 10 days earlier. 42% of the Nasdaq 100 stocks advanced on Tuesday, compared with 34% of the S&P 500 stocks and 50% of the Dow 30 stocks. This retracement was to be expected, given the preponderance of gainers on Monday.  The GMI reflects strength in the QQQQ, which is in the second day of its new up-trend (U-2).  The percentage of stocks in my universe of 4,000 that closed above their 10 week averages declined two, but the percentage in a short term up-trend increased by four.  The percentage of stocks that have doubled in the past year and are above their 30 day averages declined two percentage points.  About an equal percentage of stocks (12%/13%) are within 5% of their yearly high or yearly low.

I remain cautiously bullish as long as the QQQQ remains above its 30 day average.  There are plenty of interesting stocks flexing their muscles.  Check out:  NTRI, IRIS, KNDL, TIE, ADSK, NDAQ, AAPL, VIVO.  These are not recommendations, only a starting point for research and study.

Please send me your feedback at: silentknight@wishingwealthblog.com.

I suggested yesterday that the market seemed like it could reverse in this sea of gloom.  The QQQQ did break above its 30 day average on Monday and closed there.  Moreover, 61% of the stocks that hit a new high 10 days ago closed higher on Monday than they did 10 days earlier.  While this was far from the 100 successful 10 day new highs I would like to see for this index to count as positive, it would be impossible for this indicator to turn positive for some time if I required 100 succcessful 10 day new highs.  This is because, before Monday,  there has not been a day with 100 new highs since October 4.  There were 112 new yearly highs in my universe of 4,000 stocks, and 48 new lows.  This was the first day since October 4, that there have been more new highs than new lows.  86% of the Nasdaq 100 stocks rose, along with 91% of the S&P 500 stocks and 93% of the Dow 30 stocks.  These are the strongest readings since September 6.  34% of the stocks in my universe closed above their 10 week averages, and 61% of the Nasdaq 100 stocks closed above their 30 day averages.  64% of the stocks that have doubled in the past year closed above their 30 day averages.  And there are now more stocks within 5% of their 52 week high (14%) than their 52 week low (11%).  In short, this market has strengthened considerably and I am moving from cash into equities.  Monday was the first day in the new QQQQ up-trend (U-1).

Please send me your feedback at: silentknight@wishingwealthblog.com.