Stock Market Technical Indicators & Analysis
With the GMI at 6 (of 6) and the QQQ short term trend now up, I must grit my teeth and wade back into this market. I have to heed my indicators and not my emotions. Perhaps good 2nd quarter earnings will propel a lot of stocks higher. I am monitoring stocks with green line break-outs (GLB) to all-time highs. Check out ROCK, which last Friday broke through a top last reached in May, 2006:
It has been a wild ride with the GMI signals reversing quickly from Sell to Buy. I like to give my signals a few days after a change before I act on them. So I will watch mainly from the sidelines for a while. I am very concerned about the down-trends in many bank stocks. Look at this “naked” chart of the 4,10, and 30 week (red line) averages for GS, a leader in the financial area. The gray solid line is the weekly close, currently leading the other averages lower.
Most of the major banks have emerging down-trends like GS. Here is BAC.
And then there is the ugly AAPL chart.
Once charts top out, one never knows where the bottom will be. At least for now, these charts indicate to me stormy weather ahead for this market and maybe the economy. And then there is strengthening gold, GLD, perhaps reflecting fear and a weakening dollar.
Here is the dollar ETF, UUP. Its 30 week average has topped out.
And the GMI is now 5 (of 6) and signalling Buy!?
It is at times like these when it helps me to look at longer term charts for perspective. This monthly chart of the QQQ back to 2000 shows that the current market is not yet showing signs of a major decline. (The DIA and SPY charts look similar.)
The QQQ would have to decline below recent support levels reached last February, around 94, to make me think this might turn into a bear. (I dismiss the prior “flash crash” low of August, 2015 as a man-made, contrived aberration without technical significance.)
There are a few things making me think this market could bounce later this week. Bloody Fridays often lead to bloody Mondays as people look at their declining account balances over the weekend and sell stocks in a panic at the open. But three other signs make me think we may get a strong bounce: 1) the put/call ratio is at 1.17, a level denoting option traders’ extreme fear, which occurs typically at bounces/bottoms; 2) this week is end of quarter mutual fund window dressing when funds buy up the stronger stocks so their quarterly portfolio reports look good; and 3) on last Friday the most NASDAQ 100 stocks (66) traded at or below their lower 15.2 daily Bollinger Bands since the market bottom of last February. Do these indicators guarantee a strong bounce next week? No, but I would not start selling Monday morning…………
The GMI is now at 2 (of 6) and will issue a Sell signal at Monday’s close unless the markets strengthen.
