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GMI: +6; WPM shows weakening Dow stocks; QQQQ looks promising

@ 12:01 am

The GMI remains at a maximum reading of +6.  In spite of the weakness of the indexes on Friday, there were still 258 new highs in my universe of 4,000 stocks.  However, only 30-37% of the Nasdaq 100, S&P 500 and Dow 30 stocks advanced on Friday.  Gmi0331 Still, 48% of all stocks are in a short term up trend and 66% are in a longer term up trend.  The GMI-L is a maximum 100, indicating that the four indexes are in up trends.  However, the small cap stock index (IJR) and the QQQQ are in stronger short term up trends.  The GMI-S is 75.  39% of stocks are within 5% of a new high and only 5% are near a new low.

The greater short term strength in the tech  and  small cap stocks is clearly evident in the WPM.  While all five indexes are in short term up trends, only 50% of the Dow 30 stocks and 54% of the S&P 500 stocks closed above their 30 day averages.  There has been considerable deterioration in the Dow stocks, down from 67% on March 10.  Wpm0331 All ifive ndexes and their component stocks are in longer term up trends.  The weakening in the large cap stocks contrasts with the growing strength in the tech stocks.  We may finally see the more speculative tech stocks taking off the next few weeks as first quarter earnings are released.  In fact, this weekly chart of the QQQQ shows that this index closed above its 10 week average (dotted line) for the first time in ten weeks.   I have found that I  tend to make profitable trades as long as the QQQQ closes above its 10 week average.  Qqqq0330 The QQQQ seems to have broken out of an ascending triangle and has just successfully tested support at the break out line.  As long as the QQQQ remains above the ten week average, I will be willing to remain long in tech stocks.

Please send your comments to:  silentknight@wishingwealthblog.com.

GMI: +6; QQQQ still stronger; watching for a QQQQ break out

@ 8:34 am

The GMI remains at +6.  There was minor deterioration in some indicators.  However, the Nasdaq 100 stocks still appear to be stronger than the other large cap stocks.  Gmi0330_1 59% of the Nasdaq 100 stocks rose on Thursday, compared with 32% of the S&P 500 stocks and 23% of the Dow 30 stocks.  The QQQQ did trade above its channel line on Friday (see yesterday’s chart) but  failed to close above it.  I am closely watching for a high volume close of the QQQQ above the channel line, around 42.11.  I would then consider buying the QQQQ’s.

Gert:  Please get well soon; we miss you.

Please send your comments to:  silentknight@wishingwealthblog.com.

An epiphany on moving averages and trend lines; IJR; GMI: +6; tech’s turn?

@ 12:01 am

I’m back after a vacation.  Well, it was more than a vacation.  I have been burnt out on this market.  Nothing I have done worked and my account has gone nowhere. The March IBD meetup had only four persons, including myself.  All of us were complaining about the difficulty we are having trying to trade this market.  And then I had an epiphany.  I realized that moving averages are useless for providing signals in a trendless market.  Take a look at this chart of the QQQQ.  Qqqq0329 It is clear to me that, except for the false breakout in January, the QQQQ has been in a flat channel.  This index has gone nowhere since last November.  Why should we expect to have made any money trading tech stocks in this period?  Notice that during this time the index has gone back and forth over the 30 day (red) and 50 day (green) moving averages.  Thus, the averages and the GMI have been giving erratic, contradictory signals.  The QQQQ had a nice rise on Wednesday but I will believe this rally is for real only if the index closes above the upper channel line (around 42.10) on higher volume soon.  If it bounces off the line, I will expect a decline back to the area around 40.19. 

I have a renewed sense of respect for the value of trend lines. Look at the nice up trend in the IJR small cap index.  Ijr0329 This index has been rising since early October.  In contrast to the QQQQ stocks, traders in small cap stocks probably made money in this period.  Why do trend lines work?  I guess because so many people think they work.  Why should I care to understand the reasons, so long as the lines help me to predict probable levels of support and resistance.

The GMI remains at +6.  There were 231 successful 10 day new highs (stocks that hit a new high 10 days ago and closed higher Wednesday than they did 10 days earlier) in my universe of 4,000 stocks.  Gmi0329   There were 373 new 52 week highs and only 16 new lows.  86% of the Nasdaq 100 stocks rose, along with 78% of the S&P 500 stocks and 77% of the Dow 30 stocks. More than one half (51%) of stocks are in a short term up trend and 65% are in a longer term up trend.  The GMI-L (longer term) remains at the maximum reading of 100.  The GMI-S is at 75.  The QQQQ and IJR appear to be stronger than the DIA and SPY indexes. 39% of all stocks are within 5% of a new high.  It looks to me like the forgotten tech stocks may be about to join the bulls’ party……

Gert:  Please get well soon; we miss you.

Please send your comments to:  silentknight@wishingwealthblog.com.