General Market Index (GMI) table

AAII presentation yesterday; world markets and banks in BWR down-trends; mainly in cash, see The Big Short

@ 11:34 am
GMI2/6
GMI-24/9
T210840%

I presented a workshop for three hours yesterday to the DC metro AAII meeting, about 80 wonderful attendees. I taught them how I use modified GMMA charts to determine the general market’s and an individual stock’s major price trends. I then showed them that the QQQ and SPY were in BWR (longer term blue moving averages above shorter term red moving averages with a white space between them) down-trends. I did not show them my watchlist of 38 index ETFs from around the world.  All but one, perhaps Ireland (where US companies are moving their corporate homes), are in fully developed BWR down-trends. Here are just a few:

Brazil:

Screen Shot 2016-02-21 at 11.06.12 AMIndia:

Screen Shot 2016-02-21 at 11.07.07 AMUnited Kingdom:

Screen Shot 2016-02-21 at 11.07.49 AMEmerging Markets:

Screen Shot 2016-02-21 at 11.08.37 AMIsrael:

Screen Shot 2016-02-21 at 11.09.25 AMIreland is the strongest of all, but a budding down-trend now:

Screen Shot 2016-02-21 at 11.10.48 AMI could have shown you the others, but you can trust me that  37 of 38 world market ETFs I looked at are in solid BWR down-trends. Are we scared yet? The last time I saw anything like this was in 2007 when all of the bank stocks were in BWR down-trends. How are the banks doing now?

Bank of America, BAC:

Screen Shot 2016-02-21 at 11.13.57 AM

Citicorp, C:

Screen Shot 2016-02-21 at 11.14.36 AMGoldman Sachs, GS:

Screen Shot 2016-02-21 at 11.15.25 AMWells Fargo, WFC:

Screen Shot 2016-02-21 at 11.16.26 AMAre the Dow Jones Transports turning around as some pundits have opined?

Screen Shot 2016-02-21 at 11.18.02 AMHow about the Dow 30 index?

Screen Shot 2016-02-21 at 11.18.43 AM

The GMI remains on a Sell signal and I am mainly in cash. Plenty of time to get back in later once the market has turned up. When will that occur and from what level?  Nobody knows (but don’t hold your breath)….. For some insight,  go to the movies and see The Big Short.

GMI02192016

 

Market very over-sold; bounce likely; Contrafund and Bill Miller’s fund in down-trends

@ 6:53 pm
GMI0/6
GMI-22/9
T210823%

The futures are indicating a large bounce in the market  on Tuesday, at least at the open. With the GMI at 0 (of 6) it is way too early to determine if this bear has died or is just hibernating for  a brief time. We will go over things at my AAII workshop in Virginia next Saturday. You can register here.

I thought I should show you that the GMMA charts I use to monitor the market indexes and individual stocks can also be used to time entry and exit from  mutual funds. Below are the charts for the highly acclaimed mutual finds: Fidelity Contrafund (FCNTX) and Bill Miller’s Legg Mason Opportunity Trust (LGOAX, Class A). Note the strong RWB up-trends in 2014 and early 2105. It should be clear that  one could have exited these funds when their RWB up-trends dissipated.  While I exit my university pension mutual funds during down-trends, I always continue new contributions as they decline. Unlike individual stocks, large mutual funds are likely to rebound when the market turns.

Contradunf02152016LGOAX02152016The GMI remains at 0.

GMI02122016

Why I follow my General Market Index, GMI

@ 8:40 pm
GMI0/6
GMI-21/9
T210827%

It took me a long time to understand the wisdom of Nicolas Darvas and William O’Neil’s advice to always trade in synch with the overall market’s trend. I learned the hard way that the same buy set-ups and rules that worked in a rising market failed repeatedly in a declining market. That is why I go short or retreat to the sidelines when my indicators, summarized in the General Market Index (GMI), lead me to issue a Sell signal. The last Sell signal occurred on December 10, 2015. Since then I have been mainly in cash. I find it very difficult to stay in and  trade on the short side, and leave that strategy to younger people with greater ability to handle the risks and losses from shorting.

I decided it was time to assess once again whether following the most recent GMI signal was an effective strategy. This table leads me to conclude that it was. As William O’Neil has taught, most (about 70-80%) stocks follow the trend of the general market averages. During the period since the December GMI Sell signal, between 78%-92% of the stocks in the three ETFs I follow most closely declined through last Friday. Because many of the GMI components are based on the action of the QQQ, it is not surprising to me that the QQQ and its component stocks performed the worst since the GMI Sell signal; the QQQ declined -13.5% and 92% of its component stocks declined, 60% fell by 10% or more, since the day of the GMI Sell signal. But all three index ETFs have declined since then and the overwhelming majority of their component stocks have also declined.

I know the media pundits say one cannot time the market, but the GMI has gotten me out of the major market declines since 2000 and back in during the recovery. I never worry about missing the market’s eventual recovery. If I get back in lower or even equal to  where I exited, I did well enough and avoided a lot of mental anguish…

GMIperf02062016

Speaking of the GMI, it remains at a 0 (of 6) and I remain in cash.

GMI02052016

My AAII workshop is February 20, register here.