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GMI:0; GMI-R: 0; Worden T2108: 21%; In cash and puts

@ 12:01 am

The GMI and GMI-R remain  at zero.  Thursday was the eleventh day in the current QQQQ short term down-trend.  There were 30 new highs and 578 new lows in my universe of 4,000 stocks on Thursday.  A lot of the new highs are being achieved by bond funds and the new inverse ETF’s that rise when the market falls.  Still, the number of new lows is a lot less than the 730 and 1,011 registered on January 8 and 9.  So the current decline is not driving as many stocks to new 52 week lows. The Worden T2108 indicator is at 21%, still above the level reached in recent bottoms.  The decline last August ended with the T2108 at 7.7% and the decline in June, 2006 ended with it at 13.6%.   T2108 is the percentage of NYSE stocks that closed above their 40 day moving averages…….

I made money today in the declining market as my put options gained.  I remain largely in cash though, given that the market could bounce strongly at anytime.  When the GMI rises to around 3, I will consider going long again, or I will add to my shorts after a failed rally.  Remember, no one can consistently predict when a trend will end.  We just have to wait for the turn to manifest itself.

GMI:0; GMI-R:0; 9th day of QQQQ down-trend; Cramer says stay in the market for 20 years

@ 12:01 am

Well, the GMI and GMI-R continue to register zero.   There were 500 new lows in my universe of 4,000 stocks on Tuesday, and 28 new highs.   On January 9, there were 1,011 new lows, so the current decline has not created as much damage thus far.   Nevertheless, since the start of this down-trend on January 3, the Nasdaq 100 index has fallen 8% and 83% of the Nasdaq 100 stocks have declined, 31% have declined 10% or more.   Ten of the stocks have fallen 18% or more, including past leaders such as RIMM, ISRG and GRMN.   You can see why it does not pay to fight the trend of the index (QQQQ).   It also shows the wisdom of using stop loss orders to preserve gains.   When the leaders like GOOG (-7%) and even AAPL (-13%) begin to falter it presents ominous signs for the rest of the market.

Nicolas Darvas was right when he wrote that it is folly to remain in a bear market and to thereby surrender one’s precious bull market profits (see my post on Darvas on last Monday, 1/14).   And what did Cramer say to his viewers tonight about the market?   Because there has never been a 20 year period when the market did not gain, people should remain in the market!   So, we should all stay in this market knowing that our money will probably be worth more in 20 years—masochists rejoice!