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The market strengthened considerably Tuesday.  Normally, I would wait one more day for my daily indicators to turn positive.   But the rise was so consistent across my indicators that I am taking a chance on calling a turn. So the GMI is now at +6.  Tuesday was day 1 of the new up-trend (U-1) in the QQQQ. 36% of the 4,000 stocks in my universe are in a short term up-trend and 62% are above their 10 week averages.  31% of stocks are within 5 percent of their 52 week highs and there were 296 new highs Tuesday. There were more than 100 new highs in each of the past five trading sessions.  51% of stocks closed above their 30 day averages, the highest percentage since August 15. On Tuesday, 88% of the Nasdaq 100 and S&P 500 stocks advanced, along with 93% of the Dow 30 stocks.

In respect for the calamity and suffering in the gulf, I am suspending market analysis for now.  I will continue to update the GMI daily.  I hope everyone will do their part to come to the aid of our fellow human beings who face almost insurmountable circumstances over the coming months and years. President Lyndon Johnson once said something like, a society’s greatness is judged not by how well some people prosper, but by how well it takes care of the poor and disadvantaged in its midst.  May our country have the will and the courage to be great.

Stealth bull market?  The indexes are concealing a strengthening market.  There were 353 new highs Thursday, the highest since July 29.   The GMI rose to +4 because 57% of the 63 stocks that hit a new high 10 days ago closed higher on Thursday than 10 days earlier.  With the increasing number of stocks hitting new highs, this indicator will also be over 100 soon.  56% of stocks closed above their 10 week average, the most since August 15.  37% of the Nasdaq 100 stocks rose on Thursday, 51% of the S&P 500 stocks and 43% of the Dow 30 stocks.  29% of stocks are in a short term up-trend, the most since August 15.  28% of the 4,000 stocks in my universe are within 5% of their 52 week highs.  Since Katrina arrived on Monday, 8/29, through Thursday’s close, 70% of the stocks in my universe have advanced………………….. 

In my last post, I showed you that the longer term interest rates were falling and continuing a several week decline.  Take a look at the chart of the very short term interest rate indicator. For the first time since last May, this index is below its 30 day average (red line, click on to enlarge), suggesting that speculators think that the Fed may relieve the pressure on interest rates.  All we need now is an announcement from the Fed to that effect, for the stock markets to skyrocket. On the other hand, such a move would signal to all that the economy is critically weak………………….

So, I am accumulating good stocks.  I am being cautious and wading in slowly.

Please send me your feedback at: silentknight@wishingwealthblog.com.