Dr. Wish

2nd day of new $QQQ short term down-trend; $T2108 suggests more room to decline

@ 10:09 pm
GMI2/6
GMI-20/9
T210839%

I looked back at the length of QQQ short term down-trends since 2006. About 40% have lasted 5 or fewer days and another 16% lasted 6-10 days.   So there is about a 50/50 chance this short term down-trend could end within 2 weeks. However, one more weak or flat day and the GMI will flash a new Sell signal. GMI sell signals are more significant and can indicate a longer term down-trend. Note the GMI-2 is now 0 and the T2108 has fallen to 39%.   I start looking for a bottom when T2108 is below 20%. This weekly chart puts T2108 in context. It still has a long way to fall.

T2108weekly01022015

Market at crossroad; $AAPL –time to exit?

@ 8:18 pm
GMI3/6
GMI-23/9
T210851%

It is noteworthy that the IBD market pulse claims the market up-trend to be under pressure. My GMI is now 3, indicating a market trend that is midway between up-trend and down-trend.   Nevertheless, with my QQQ short term trend count now turning down, I am taking money off of the table. My university pension assets are double what they were at the 2009 bottom and I am unwilling to give much of it back.     I have transferred about half of my mutual funds to money market funds. I will sleep better knowing that I have protected money that I will need for retirement. (I am a chicken!)

I am hedged, long and short in my trading IRA, however. I own inverse ETF, SQQQ, which is designed to rise 3X the amount that QQQ falls. If the QQQ short term down-trend ends quickly, I will exit my position in SQQQ.   There are other storm clouds on the horizon. The QQQ has now closed below its critical 10 week moving average. In the past I have found it very difficult to make money on the long side when this was so. The fact   that the IBD Mutual Fund Index is also below its 50 day average (a component included in the GMI, see below) suggests to me that the pros who invest   in growth stocks are   having trouble…..

A lot of people are married to AAPL. It is the one stock that people seem to think is safe. Over the years I have found that as long as AAPL closes above its 10 week average it is   profitable to hold. Growth stocks should remain above their rising 10 week averages. I tend to get into AAPL when it closes above its 10 week average and to exit when it closes below. Well, AAPL has now closed the week below its 10 week average. The weekly chart below clearly illustrates this. AAPL may quickly regain its 10 week average as it did last October, and then again   it may not…..

AAPLwkly01022015

AAPL has a lot of company below the 10 week average:   TSLA, GOOG, AMZN, BABA, NFLX, PCLN, GMCR to name a few.   They typically shoot the leaders first.

The GMI remains at 3 (of 6). Two consecutive daily closes below 3 would trigger a GMI Sell signal. Note that the SPY remains above its 10 week average–for now.

GMI01022015

 

#QQQ short term up-trend could end on Friday; #UWTI when oil recovers

@ 9:02 pm
GMI4/6
GMI-23/9
T210850%

The QQQ short term up-trend has completed 8 days. Note that the sensitive GMI-2 has declined to 3 (of 8) A flat or down day on Friday would begin a new QQQ short term down-trend. This would be quite ominous because it means that the rebound from the mid-December decline is likely over. The fact that QQQ could not go on to a new high is very troubling, especially if QQQ closes below the recent decline’s bottom of 99.96. I am holding a position in SQQQ (3x bearish QQQ ETF) just in case a new down-trend begins. If the QQQ declines I will add more SQQQ. However, if the QQQ holds, I will exit and go back into TQQQ. I am willing to take a few small losses because when a real trend develops I will make it all back and more. Below is a daily chart of the QQQ.   Note the comparatively weak recent rebound from the December decline, compared with the rebound from the October swoon.

QQQdaily01012014

Last post I showed you how the 3X bearish oil ETN, DWTI,   rocketed up as oil plummeted. It got me   thinking about what will happen when oil finally bottoms out and starts to recover. It turns out there is a 3X bullish counterpart to DWTI, UWTI.   I bought a little just to keep it on my radar. When oil turns around UWTI could rocket higher. At a cost of under $5, I am willing to take on the risk.

UTWIdaily