General Market Index (GMI) table

It is impossible to consistently predict what the market will do, except by luck.   It is still possible, however, to use technical signposts to give one an edge for acting. This daily chart of QQQ shows some interesting things I monitor. First of all, the QQQ is below its 30 day average (red line) that is curving down.   This is a very ominous short term sign. Second,   note that the GMI has been on a Sell signal since January 6 and my short term daily trend indicator   has now completed its 11th day (D-11, see GMI table below).   Since 2006, 40% of these short term down-trends lasted between 11-44 days, 4% lasted 50+ days. The two solid magenta lines show the channel that the QQQ is currently within. Last Friday it bounced off of the lower channel line at which it has found support three times.   It also found support near the lower daily 15.2 Bollinger Band (BB, see the bottom of gray area between the 2 bands). From all of the above, I think the QQQ is likely to rebound to the 30 day average, or to the top of the channel. If it should fail to hold Friday’s low, however, look out below………..

The GMI, at 3 (of 6), remains on a Sell signal since January 6, but the GMI-2 (1/8) is showing considerable short term weakness.

My indicators weakened on Friday and so the GMI Sell signal remains in place.   My more sensitive measure of the short term trend of the QQQ also remains down, now having reached 6 days.   I am holding mainly biotech stocks which have been miraculously bucking any market weakness, some SQQQ as a hedge,   and a lot of cash in my trading accounts.   I am about 40% cash in my more conservative university pension accounts. I am very cautious now. The market will become very volatile now as 4th quarter earnings are released and everyone focuses mainly on estimating the   impact of lower oil prices on the future profits of many companies.

Meanwhile interest rates continue to drop as government bonds strengthen.   Note that   TLT (20 yr treasury bond ETF) broke above the possible double top I wrote about around December 23rd. Check out this daily chart that I have now updated. I guess the entire world is seeking the relative safety and better yield of U.S. long term bonds! This pattern looks like a powerful cup and handle break-out. Bonds will probably continue to be bid up until the eventual bubble bursts!

Here are the GMI stats. Note that SPY has now closed below its critical 10 week average.

I will be unable to post on Monday night, as I will be far from my computer and my statistical software. I will post again Tuesday night.