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The Cramer Circus; GMI: +6; GOOG and IVGN

@ 10:30 pm

Did you see the Cramer Circus tonight?   It was   a live show complete with a hand picked audience filled with shouting fans and extreme adulation for JC.   Elmer Gantry could not have done better.   I   attended a speech by Jim Glassman around 2000, soon after he had published his book, DOW 36,000, in which he made the “rational” case for the bull market to exceed that figure. I remember thinking that if there ever was a sign of a bull market top, this was it.   And so I felt today.   It may not come tomorrow or this month or next month, but the Cramer show today smacked of froth and irrational exuberance.

We now know why the short term interest rate indicator rose and the closed end bond funds I wrote about declined   earlier in the week.   Alan is committed to more interest rate hikes.   It is my experience that when the market stops worrying about the higher rates and believes the economy can tolerate them, the bottom falls out of the market.   I think we are getting near that point.   Alas, October is always a good month for the market to bottom.

But I wait for the GMI to detect the change in trend.   And right now things are fine at a steady +6.   Gmi720 There were 250 successful 10 day new highs today and a whopping 423 new highs in my universe of 4,000 stocks.   One in ten stocks hitting a 52 week high–hmmm.   There were 10 new lows.   69% of the Nasdaq 100 and S&P 500 stocks rose today, along with 60% of the DOW 30 stocks.   This is day nine (U-9) of the QQQQ rally.

With EBAY’s stellar earnings release tonight, GOOG appears ready to take off toward that well expected $350 level.   Heaven help us if its earnings disappoint tomorrow. Ivgn By the way, I added more IVGN today. As this monthly chart shows, IVGN topped out in 2000 at 99.50 after a rapid run-up, declined until early 2003 and rallied and peaked again around $82 in 2004.   It began a new rally in August, 2004 and has recently broken through the   $82 prior 2004 peak.   IVGN’s earnings have been up triple digit.   The company provides supplies to many biotech companies. I think IVGN provides a way to ride the biotech boom without depending on new drug discoveries to power the stock.

Enjoy the earnings rally; GMI: +6; posted stocks at new highs

@ 11:04 pm

To my visitors: I am only one trader, not a guru, and not a financial advisor.  I am presenting my own opinions and my own experiences and people are welcome to decide for themselves what, if anything, on this site is of value to them.  Please refer to the additional comments, highlighted in red, at the end of this post.

A lot of stocks are rising on earnings expectations and falling on the release.  It is not unusual to get an earnings rally in the general market and then to get a post-release decline. Gmi719  I would not be surprised to see a weak August through October period, but will let the GMI guide me.  The GMI remains at +6 and it was a strong day.  Many of my longs went to new highs today. In fact, there were 259 new highs in my universe of 4,000 stocks and only 11 new lows. The 10 day new high index bounced back with 243 successful 10 day highs.  59% of the 413 stocks that hit a new high 10 days ago closed higher today than they closed 10 days ago.  About 70% of the stocks in the Nasdaq 100, S&P 500 and Dow 30 indexes rose today. We are in day 8 (U-8) of the QQQQ rally…………………………..

Among the stocks I have mentioned before that hit new highs today are:  BTU, HANS, LUFK, NTRI, GOOG, PRGS, CME, GDW, BBY. (I own some of these.)  Other stocks I have started following (and may own) include DSL, KOMG and XWG. I have sell stops in on all of my holdings and am letting things ride for now.  Sell stops provide me the ability to focus on my job during the day and to sleep peacefully at night………………………..

Enjoy this rally!   Send me your feedback at: silentknight@wishingwealthblog.com.

Please remember that the stock market is a risky place, especially now.  I am not providing recommendations for you to follow.  My goal is to share tools and methods that I have used over the past 40 years of trading, so that you may learn from them and adapt them to your trading style and needs.  While I do my best, I do not guarantee the accuracy of any statistics computed or any resources linked to my blog.  Please consult with your financial adviser and a mental health practitioner before you enter the stock market,  and please do not take unaffordable risks in the current market environment.  See the About section for more statements designed to protect you (and me) as you navigate this market. Past performance does not guarantee future results, but I would rather learn from a former winner than a loser.

GMI: +6; new high index weakening; selling in FTO’s sector

@ 11:27 pm

The GMI remains at +6.   Gmi718 However,   the 10 day new high index was weak.   Only 103 (56%) of the 183 stocks that hit a new high 10 days ago closed higher today than they closed 10 days ago.   Both Darvas and O’Neil have written that when breakouts to new highs begin to fail, the market may be topping.   Only 28% of the Nasdaq 100 stocks rose today, 30% of the S&P 500 stocks and 17% of the Dow 30 stocks.   On the other hand, there were 130 new highs and only 8 new lows today.   We are in the 7th day of this up trend in the QQQQ.   I am not worried yet, but I am watching my stocks more closely and not adding to positions.

Just for fun, I ran a scan of stocks that seemed to be breaking down today below their 30 day average.   I was surprised to find a lot of closed end funds that invest in bonds, especially municipal bonds.   Are long term interest rates finally going to rise, ending Alan’s conundrum? Irx718_1 Look at this chart of the short term interest rate indicator.   It just keep rising, suggesting that at least near term rates are headed higher.   Here are some examples of interest rate related stocks that appeared in my scan today:   MUA, MVF, MYD, MQT, NXZ, NPX, NPM, NPT, PMX, PMF.   Most of these are bond funds.   Why are they breaking down?   Maybe some of you have some ideas about this pattern of declines?

I would also watch out for the oil and gas refining stocks.   Note the recent high volume selling in FTO, one of the strongest stocks in the group. Fto Other stocks with high volume declines include IMO, GI, IOC, SU, MRO.   Is oil finally topping out or is this just a rest–   caveat emptor!