General Market Index (GMI) table

I think this market is strengthening into 3rd quarter earnings. Many down markets have bottomed in October. Remember to “come back at Halloween.” So there were 35 stocks at an ATH on Friday and one of them, ARW,  was a high volume GLB.  A GLB must not CLOSE below its green line. If it does I sell it immediately. For ARW, the green line is at 237.33. Rather than using a physical stop on a GLB I have purchased, I look at it each day around 3:45 PM to see whether it will likely close below the green line. Many successful GLBs trade intraday below the green line but rally to close above it and I would have wanted to retain it. In such a case a stop loss below the green line might have sold me out even though it closed back above the line. I only want to sell it immediately if a GLB closes back below the green line. If it closes below the green line and then closes back above it I may buy it back. I will discuss GLBs on my MoneyShow talk on October 20.

I have never seen anything like this situation. T2108 shows that only 24% of NYSE stocks closed Friday, above their 40 day averages of price, a level last reached in the large market decline last April.

And the equal weighted S&P500 stocks ETF is also weak.

But the capitalization weighted SPY ETF looks stronger.

QQQE, the equal weighted QQQ, declined last week:

While the cap wtd QQQ rose!

What does all this mean? It means that  the cap weighted indexes whose averages are driven largely by the popular big tech stocks, are masking the decline occurring in most stocks! On Friday, more US stocks hit yearly lows than highs (119/59) and only 15 of 6500+ stocks reached an ATH! This is not the time for me to be buying stocks trading at ATHs. The odds are against me.  Only 34% of the NASDAQ 100 stocks closed Friday above their 50 day averages!  But my GMI table below shows that on Friday, QQQ actually began Day 1 of a new short term up-trend! My GMI and GMI2 stats are based almost totally on the cap weighted index, QQQ. To rely on the cap-weighted stock indexes is now misleading until the equal weighted indexes should again correlate better with them. Either the large cap stocks will lead the  other stocks up or they will follow the smaller cap stocks down. Stay tuned!