Dr. Wish

While the indexes were stronger Thursday, some of my indicators hit new lows.  On Thursday, 59% of the Nasdaq 100 stocks rose, 49% of the S&P 500 stocks and 50% of the Dow 30 stocks–a modest rebound.  There were only 12 successful 10 day highs–12 of the 240 stocks that hit a new high 10 days ago closed higher Thursday than they did 10 days earlier.  In comparison, there were 75 successful 10 day new lows.  Buying stocks at new highs 10 days ago has clearly been a risky strategy.  There were 8 yearly highs and 278 new lows in my universe of 4,000 stocks.  Only 11% of stocks are in a short term up-trend.  Thursday was day seven in the current QQQQ downtrend (D-7).

What more evidence do we need to know that this is the time to be in cash or short.  As they used to say, not even a skunk could make a scent in this market.  Last night, I visited with a physician friend whom I had taught my trading rules.  He has made huge gains over the past few years.  He has independently decided that it makes sense to trade only in strong rising markets and is now out of the market.  He is content to wait for a long time, if necessary, before buying stocks.  The next challenge for us all is to resist the temptation to buy "bargains" on the inevitable coming bounces, until the GMI signals a real change in trend.

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

There was not much change today in my indicators.  The GMI remains at +1, indicating that this market continues in a down-trend.  One more decline in the QQQQ should turn its weekly indicator negative, and the GMI to zero.  I had hoped the market would bounce for a few days as new earnings were released.  However, the failure of Apple to bounce after Tuesday’s close suggests to me that this market is rotten to the core.  Look how bad the market internals have become.  Only 27 of the 127 stocks that hit a new yearly high ten days ago closed higher on Tuesday than they closed 10 days earlier.  The dearth of successful 10 day highs contrasts with the number of successful 10 day lows–47 out of 75.  Buying stocks at new highs 2 weeks ago has not been as profitable as shorting new lows.  There were 34 new highs Tuesday and 185 new lows.  Only 19% of the 4,000 stocks in my universe of stocks are in a short term up-trend and only 27% are above their 10 week averages.  Only 45% of the stocks that have doubled this year are above their 30 day averages.  And more stocks are within 5% of their yearly lows (15%) than their yearly highs (10%).  Only 30% of the Nasdaq 100 stocks rose Tuesday, along with 24% of the S&P 500 stocks and 29% of the Dow 30 stocks.  Tuesday was the fifth day (D-5) in the QQQQ down-trend.  If things continue to deteriorate, I might start looking at gold mining stocks.  Note that ASA is already flying high–and it pays a dividend.

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