All of my indicators are negative; 100% cash; $CURE getting sick

GMI0/6
GMI-20/9
T210821%

Nobody knows when this market will find a bottom. Note in this “naked” weekly chart of the QQQ, the 4wkavg(red dotted)<10wkavg(blue dotted)<30wkavg (solid red line). This is my primary definition of a   “submarine” pattern. It shows a stock or ETF in a significant down-trend. I am in cash in both my university pension and all trading accounts. There is so much time to be invested when the indexes are in a rising   “rocket” pattern. Note this was the case from July 2014 until recently, when the blue dotted line was rising above its rising red line. When the 4 and 10 lines move back above the red line, I will begin to look for long positions.

QQQ4103009252015

For the past 4 years one could ride the health care stocks in the 3X bullish ETF, CURE. For the first time since 2012, CURE’s 10 week average is now below its 30 week average. The leaders are starting to turn down……

CURE09252015

The GMI and GMI-2 are both registering 0.

GMI09252015

 

Market Stage 4 down-trend deepens–mainly in cash; $ZLTQ–GLB holding

GMI2/6
GMI-23/9
T210828%

The major index ETFs I follow, DIA, QQQ, SPY clearly signal to me that a   market down-trend has begun. An up-trending mrket should have the pattern of the 10 week average rising above the 30 week average. When the 10 week average falls below the 30 week average and the 30 week average turns down, that index is in a Stage 4 down-trend. Once a Stage 4 decline begins, one never knows how long it will last. I therefore exit the market and sometimes buy the relevant inverse index ETF. Take a look at the weak patterns of these ETFs in these weekly charts (the 30 week average is the solid red line,   the 10 week average is the blue dotted line, and the 4 week average is the red dotted line). Click on charts to enlarge.

DIA09182015

SPY09182015QQQ09182015

The DIA and SPY, which contain large multi-nationals, have the more pronounced declines underway. The QQQ, composed of many tech stocks, is now catching up (or down!) with the other indexes. These charts are exhibiting patterns similar to those that occurred at the beginning of the major declines in 2000 and 2007. These patterns got me out of the market early in those major declines and they are telling me to exit now. If the current declines are much more shallow than the others and I miss part of a rebound, that is fine with me. That is the cost of my insurance against a huge loss. There is plenty of time for me to re-enter the markets once the coast is clear and I am confident that a new Stage 2 up-trend has begun. Only a stock addict thinks s/he must always be in the game. (I trade in a tax deferred account and do not worry that selling out will trigger taxable events.) I will not fight the market tide. Once a down-trend begins, it is impossible to reliably predict how long it will last. Stay tuned……

I have written about the fact that stocks that remain strong in a weak market are worth monitoring. I wrote that ZLTQ has a new (cool sculpting) process for eliminating body fat. I heard about it from a friend who has undergone the procedure. ZLTQ is holding its recent GLB, green line break-out, even in this market. I am watching ZLTQ closely. Here is its monthly chart.

ZLTQ09182015

The GMI remains on a Sell signal.

GMI09182015

 

Taking stock of the market– technical indicators at extreme levels; $INGN

GMI0/6
GMI-23/9
T210820%

I am coming around to the idea that the market decline may have already put in a bottom. Here are my reasons. First, the Investors Intelligence poll has now reported that there are more bears than bulls, a very rare occurrence. Market sentiment polls are called contrary indicators because when the results reach an extreme, the market often reverses and goes the other way. Too much bearish sentiment is often a precursor to a decline’s end. Second, during the August decline, another contrary indicator, the put/call ratio, reached an extraordinary high of 1.42. That means that people were trading a lot more put options than call options (142 puts for every 100 calls). Put options are bets that an equity will decline,   while call options are bets that it will rise. This extreme bearishness in option traders is another sign of at least a short term bottom. Third, I have often written that when the Worden T2108 indicator goes into single digits, I should back up the truck and buy a large market index ETF like SPY. This is psychologically very difficult to do in the middle of an extreme market decline, but this low level of the T2108 indicates a severely oversold market. This monthly chart shows the complete history of the T2108 indicator since its inception in 1986. There have been only 3 times since 1986 when the market has had a lower reading of T2108 than the 5.99% reading reached last month. The one month in October, 1987, when the market declined 20% in one day was the lowest recording of T2108 ever recorded, 0.47% and in 2008 it reached 1.2%. Last month’s reading of 5.99% was the 4th lowest monthly reading ever recorded.   T2108 measures the percentage of all NYSE stocks that are below their 40 day simple moving average. I interpret it to act as a pendulum of the market and post it each time to the right of this blog page. (It is also incorporated in the Worden software.) I look for market bottoms when T2108 is in single digits. The green line in the chart is drawn at 10%. (Click on chart to enlarge.)

T210809112015On the other hand, this weekly GMMA chart of the DIA shows it to be at the beginning of a bearish BWR pattern, with all of the shorter term averages (red lines) now trending below the longer term averages (blue) with a white space separating them. I tend to exit the market when this bearish pattern occurs in the major averages. Looking at this chart it is impossible to tell if this decline will end in a few months like it did in 2011 or take over a year like it did in 2008. One never knows in advance when a market decline, once started, will end….

DIAGMMA09112015

I love weak markets when few stocks hit new yearly highs. It is easier to see the leaders. A stock that can come through a large decline at new highs is evidencing unusual buying interest.   I like to keep such stocks in a separate TC2000 watch list for me to monitor. (I often set an alert in TC2000 to tell me if the stock breaks out.) This is how I found GMCR when it broke above a a green line top to an all-time high in early 2009 after the 2008 bear market ended.   GMCR eventually became a 10 bagger (10x increase).

GMCR09112015

On Friday, there were only 37 new highs and, after looking at their long term charts,   I selected these 17 stocks to keep in my watch list.   Most are above a recent green line top. I, of course, will not buy anything until I see a new market up-trend and have the wind at my back. One of the stocks on this list, INGN, I wrote about last December because my talented stock buddy, Judy, liked it. Then the stock was at $30.25, last Friday it closed at $54.58,   up 80% from when I wrote about it. (Any of you buy and hold it?) I have asked Judy to research this list for more gems……

Newhighs09112015The GMI remains at 0 (of 6).

GMI09112015