General Market Index (GMI) table

IBD sees renewed up-trend. MY GMI and QQQ short term trend indicators are still pointing to a down-trend. For me, this rise remains a “dead cat bounce” until more of my indicators turn positive. A lot of technical resistance is just above current levels. By the way, I drew the lower horizontal line in this chart months before QQQ found support there in January. We likely will see at least a re-test of January’s lows.

The SPY continues to look quite weak, in a BWR down-trend.

The GMI remains at 0 (of 6) and on a Sell signal since December 10th.

A number of you have asked me about  inverse index ETFs so you could short the market. Below is a table that my co-instructor, David, built for the undergraduates enrolled in our stock market class. The table includes leveraged ETFs, which attempt to move 2-3 times the underlying index. Leveraged ETFs can be dangerous. It is important to read up on how they work and to monitor holdings quite carefully. The table also contains some ETFs that trade long or short with the price of gold. There is also a whole new class of light leveraged ETFs, not in the table,  which you can learn about here.

I will  be presenting  a 3 hour workshop for the AAII  DC Metro Chapter in Virginia in February. It is open to the public. While there is a small charge, the money raised goes to cover the expenses for the venue and to support AAII and my substance abuse research center at the university, both good causes. My co-instructor, David, and I take no compensation for the presentation. A notice about the workshop appears here. For those of you who want to learn more about my approach and to ask questions, here is our chance to meet. Just click here to learn more or go to:  http://www.aaiidcmetro.com/

The GMI remains at 0 (of 6) but the very sensitive GMI-2 has climbed to 3 (of 6). If the market indexes remain in a down-trend and they become short term over bought and begin to weaken, I might buy a leveraged inverse index ETF.  It is important to always trade with the market’s trend. The T2108 is now at 14, and no, I did not have the courage (foolishness?) to buy a bullish index ETF when T2108 was below 10!

If the QQQ (103.77) could close back above all of these 12 weekly exponential moving averages, around 108.40, I might suspect a new up-trend. For now, I am looking for the proverbial “dead cat bounce.”

The SPY looks even weaker than QQQ and remains in a BWR down-trend:

The T2108 closed at 9, but reached as low as around 6 intraday on Friday. T2108 is a great pendulum of the market. It is in single digits only near market lows. While it did reach around 1% in the 1987 and 2008 crashes,  most large declines have ended with T2108 around 6-7%. As I have written before, when the T2108 has been in single digits it has turned out to be a good time for me to buy an index ETF or mutual fund. Unfortunately I am always afraid to do it because the market and the news seem so bad at that time. Will this time be different????

I love weak markets because the new high list is very small and it is easier to uncover the few stocks bucking the bearish trend. Sometimes these stocks can lead when the market trend turns up. So I make a list of these stocks and watch them as things develop. Two stocks showing amazing strength and trading near their all-time highs are SCAI and SLP. Both appear to have recent good earnings and are worthy of my attention. But given the current market down-trend, I am reluctant to trade them. The bear could devour them at anytime. So for now, I will watch them from the sidelines. Note their RWB up-trends and the unusual high volume last week when they rose. Both are above their recent green line tops, indicating they are near their all-time highs. The dotted line represents the closing price and note for each it is leading all of the 12 red and blue averages higher.

By the way, the news media are comparing the current market decline to the vicious one from 2008. Take a look at this monthly chart of the SPY. A picture is worth a 1,000 words, maybe a million words from a stock market media pundit! (It’s too early to say this is like 2008.)

I thought you might like to revisit the post I wrote on November 10, suggesting that AAPL, at $116.77,  was forming a head and shoulders top.

This weekly chart shows what happened to AAPL after my November post.

AAPL is now at $97.13. Sometimes my prognostications work out! But will it fall to my target, around $80?

And here is the GMI, still 0 (of 6) and on a Sell signal since mid-December.