The market internals deteriorated further Wednesday. Only 31% of stocks in my universe of 4,000 are in a short term up-trend and 39% closed above their 10 week averages, the lowest reading since I began tracking this indicator last June, and down from a high of 84% in July. 
The GMI is at +2. There were more than 100 new highs yesterday (153) and the longer term QQQQ weekly indicator is still positive. While there were 104 successful 10 day new highs, this total represented only 36% of all new highs 10 days ago–so I consider this indicator to be questionable (?). There were more new lows (158) than new highs (153) -a very bad omen. Most telling, the IBD growth mutual fund index is now below its 50 day average, indicating that the pros are faltering now too. I never make money trading growth stocks when the growth managers aren’t successful. The percentage of stocks closing within 5% of their 52 week highs is now down to 20% while those near their lows increased to 10%. Only 13-22% of the stocks in the Nasdaq 100, S&P 500 and Dow 30 advanced on Wednesday….
For me, this is a time to be short or in cash. According to my indicators, we are much closer to the beginning of a decline than to the end.
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Only 26% of the stocks in my universe of 4,000 are in a short term up-trend. 48% of the Nasdaq 100 stocks, 47% of the Dow 30 and 59% of the S&P 500 stocks rose on Thursday–not a very strong rebound. There were 166 new lows and 114 new highs. This is day three (D-3) of the QQQQ down-trend. 19% of stocks are within 5% of their 52 week highs and 10% are within 5% of their lows. I remain mostly short or in cash.
