The GMI and GMI-R remain at zero and the Worden T2108 indicator is at 2%. In spite of the decline on Wednesday, there were only 347 new lows (and 1 new high) in my universe of 4,000 stocks. Compare this with over 2,000 new lows for each of three days last week. This means that in spite of the declines in the averages, most individual stocks are not as low as they reached last week. It will be interesting to see if the number of new lows is contained again the rest of this week. The media pundits got it wrong again. On October 19, 1987 the Dow fell 22.61% (-508), a far cry from Wednesday's puny 7.87% (-733) decline. Meanwhile, I (and you?) comfortably watch this market from the sideline, almost totally in cash.
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GMI: 0; GMI-R: 0; T2108: 3%; On sidelines, mainly in cash and a little short in my IRA
The GMI ad GMI-R are both back to zero. There were 3 new highs and 38 new lows in my universe of 4,000 stocks on Tuesday. The Worden T2108 indicator remains at 3% and Tuesday was the 31st day of the current QQQQ short term down-trend….
Why place bets on the long side now when the odds are so against us? The market indexes I follow (QQQQ, SPY, DIA) are still in down-trends, and most stocks decline with the indexes. For example, since I identified the current QQQQ short term down-trend on September 2, that index has declined 26%. During the same period, 98% of the Nasdaq 100 stocks (measured by the QQQQ) declined; 40% have declined 30% or more. At the same time all but one of the Dow 30 stocks have declined along with 97% of the S&P 500 stocks. My approach to trading is to always be consistent with the trend of the market indicators. So, I have little choice but to be in cash on the sidelines, or short. In my IRA, I can go short by buying deep in-the-money put options on stocks in solid down-trends. I buy deep in-the-money puts because they have the smallest time premiums and will be profitable quickly with a minimal decline in the underlying stock. Shorting is very difficult and anxiety provoking. One can get scared out by a sudden bounce like the one that occurred on Monday. It is preferable to not be too greedy and to set profit limits so as to lock in gains before they evaporate. William O'Neil's small book on shorting has helped me to trade on the short side.
GMI: 0; GMI-R: 1; 0 new highs and only 68 new lows; T2108: 3%
Well, the bounce finally occurred! The bleeding has stopped. New lows went from 2,832 to 68 in just one trading session. There were no new highs. The GMI-R even advanced to 1 (of 10). This is still a market to watch from the sidelines. The market remains in a down-trend. It remains to be seen whether the indexes can climb enough to change the trend. The Worden T2108 indicator is still oversold and in extreme bottom territory at 3%. Monday was the 30th day of the current QQQQ short term down-trend.