Dr. Wish

IBD now sees market “up-trend under pressure.”   By my count, a flat or down day on Thursday will begin a new short term down-trend in the QQQ.   Note that the GMI-2 declined to 1. I posted mid-day on Wednesday to inform readers that I was reducing my long positions in the QQQ even more.   I now have a small long position and a larger short position in the QQQ leveraged ETF’s.   I am 100% cash in my margin account.   The market volatility scares me in the midst of the political brinksmanship   in Washington. However, the fiscal cliff mess may actually be a cover for a developing bear market.   A rally from a last minute resolution may not last long? The year after a Presidential election sometimes brings a weak market, even without extreme political melodrama.

The QQQ has broken support (see daily chart below).   I am going to cash or short.   I may be wrong but I would rather conserve cash for the next rally.   It would be a major sign of weakness to me if the QQQ closes today below 64.87. If it looks like it will I will close out my remaining TQQQ. Too many of the market darlings I follow have already been wounded, including ISRG, CMG, AZO, PNRA and AAPL. My trading gurus have written that after the leaders fall, the rest of the market eventually follows.

The QQQ held support on Monday but the short term up-trend is in jeopardy.   I trimmed back my TQQQ, increasing my hedge towards the down-side.   This next two weeks may be very difficult to trade.   Time to be very cautious.