Stock Market Technical Indicators & Analysis
The market remains incredibly oversold. However, with the GMI at 0 (of 6) and still on a Red signal, it is time for me to remain in cash.There are few times since its inception in 1986 that the Worden T2108 has been below 6%. It closed Friday at 5.65%. Only 62 US stocks (of 4929) have a daily and weekly RWB chart pattern (see glossary for definitions). That is a ghastly statistic!
In 2000 and 2008 I went to cash in all of my accounts and avoided the market carnage. The major signal that I followed was the curving down of the 30 week moving average of the QQQ. This time I have been in cash earlier because I am more conservative as I approach retirement. I know its seems counterintuitive, but the QQQ now appears to be entering a Weinstein Stage IV decline. If this is true, the down-trend is just beginning. The only thing to get me back into this market on the long side would be if the indexes can close back above their 30 week averages and the averages begin to rise. This strategy has worked great for me.
On Friday there were 21 new highs and 763 new lows in my US stock universe of over 4900 stocks. With odds like that, why try to buy stocks at new highs hoping that they continue higher? ? The best tactic of late has been shorting stocks that are trading at new lows.
All 6 of my GMI and 8 of my GMI2 indicators are negative.
If you listen to the media hype, you would think we had experienced a huge decline thus far. However, if you look at longer term trends, the current decline is quite puny. First, let’s look at the short term. My read of this daily chart of the QQQ is that short term bounces have occurred when you got a crossing of the daily 10.4 fast stochastic (red) above the slower 10.4.4 stochastics (blue). This “green dot signal” is shown on the price chart by the green dots. On the lower stochastics indicator chart it is shown by the black arrows. (In my TC2000 club there is a video tutorial showing how to add the green dot signals to charts.) Most of these cross overs have occurred with the fast stochastics (red line) below 50. While anything is possible, I think the next bounce will most likely occur from a much lower level. When the daily 10.4 stochastic declines to 20 or less, it is now 54.5, a quick several day bounce is more likely.
Moreover, the weekly chart of the QQQ is quite ominous. The QQQ has closed below its critical 30 week average for 8 straight weeks and the 30 week average (red line) is now curving down. If this decline in the 30 week average persists, it represents the beginning of a Weinstein Stage IV decline. At the 2000 and 2008 tops I got out of the market when the 30 week average turned down and I got out before the carnage. We may be at the very beginning of a major decline.
Finally, this monthly chart shows that this decline is quite small, thus far. It hasn’t even touched the 30 month moving average (red line)as it did in 2015/16.
And the GMI=0, a very weak reading. This market is for gamblers.
