New $QQQ short term up-trend in jeopardy; Market indexes look weak; So do $AAPL,$NKE, $DIS

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The GMI remains on a Sell signal even as my short term trend indicator for the QQQ is in the second day (U-2) of an up-trend. A down day on Monday could change the short term trend for the QQQ back to down. The QQQ and SPY have now closed below their critical 10 week averages for 4 weeks.

GMI12312015The GMMA charts which I have adapted clearly show the patterns of the major market indexes. When the six shorter term (red) averages are above the rising longer term averages (blue) with a white space between them we have a strong RWB up-trend. When the reverse is true we have a  BWR down-trend.

It is clear that the Dow Transportation average is in a BWR down-trend. Note the strong RWB up-trend lasted for several years, through early 2015. We now have an ominous pattern for those who follow the Dow theory of the market.

GMMADJ20The Dow 30 index is no longer in an RWB up-trend, but a BWR pattern is not in place.

DJ30GMMABut the NYSE index is definitely in a BWR down-trend.

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Perhaps the NYSE stocks are weighted down more by energy related stocks or multi-nationals. Look at the energy ETF, XLE. It is in a confirmed BWR down-trend. No one but a gambler would try to pick a bottom here. Look how clearly one can see in 2014 the change in trend from an RWB to a BWR pattern. I would never hold a long position in a stock or ETF in a BWR down-trend.

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The SPY looks like the Dow 30 and has not transitioned into a BWR down-trend yet. But it does show the end of a multi-year BWR up-trend. How much easier (and more profitable) it is  to hold stocks when the indexes are in strong RWB up-trends!

GMMASPY1231The QQQ bearly? remains in an  RWB up-trend.

GMMAQQQWhat does all of the above mean to me?  We have a split market, with  energy related stocks and multi-nationals weak but with tech stocks acting stronger. However, note that the QQQ failed to break through resistance last week, as this daily chart shows. (Click on to enlarge.)

QQQ12312015dailyThe QQQ, at 111.86, is now heading back down towards support, around 109. Will it hold, fail and re-test the lows around 98, or make another run at resistance near 114? The continuing weakness in the leader, AAPL, suggests to me more weakness in techs (and the whole market) lies ahead. This weekly chart shows that AAPL may have completed the head and shoulders top formation I have been posting about for weeks–very ominous, with a price objective around 80.

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And NKE sold off after a good earnings report.  When leaders cannot rise on good news, it is telling us something about the inner strength (or lack thereof) of the market. Check out this daily chart of NKE.

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Even DIS, with the release of StarWars, could not get out of its own way. Check out this daily chart of DIS.

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Is the bear already upon us? 2016 will tell the story……

11th day of $QQQ short term down-trend; on sidelines

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This week it will be very difficult to get an idea of the market’s near term trend. There may be some strength from mutual fund end of quarter/year window dressing. But the QQQ short term trend count is D-11 and the GMI remains on a Sell signal. IBD calls the market up-trend under pressure. The market indexes are still bouncing from a recently oversold situation and it remains to be seen how far the bounce will go. The QQQ,  at 112.59, faces considerable resistance around 114.  There does not appear to be much more room to climb, unless the index should burst through the formidable resistance. Under these circumstances I find it best to stay mainly on the sidelines and to wait for a sign of a resolution of the battle between bears and bulls. It may take until early January to get some clarity. What a nice time to relax and enjoy my academic between semester vacation.

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7th day of $QQQ short term down-trend; 100% in cash

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The GMI remains on a Sell signal and I am 100% in cash.  The major indexes are in Stage IV Weinstein down-trends. I see no reason to be in this market except on the short side. But the holiday season is a nice time to just take a break from trading. The NYSE is in a BWR down-trend. Note the transition from an RWB up-trend to a BWR down-trend.

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The Dow Jones 20 Transportation index looks even worse.

DJ2012202015And the SPY is not far behind.

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And then there is the wounded leader, AAPL.

AAPL12202015To survive in this business, one must protect capital and not fight the trend…..

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