General Market Index (GMI) table

My first YouTube Vlog (video blog) Post: Sell in May and Go Away?

@ 6:00 am
GMI0/6
GMI-20/9
T210816%

The put/call ratio is at an extreme level, about 1.3, implying a bounce soon. It is a contrary indicator such that when there are more puts than calls, like on Friday, the market is likely to rebound.   And the T2108 is very low, at 16%. The GMI is now zero for the first time since December 15, 2011.   With all of my indicators negative, is this the time to short stocks or the stock indexes?   With my son’s help, I have published my first TA video post, on the current market and the infamous “Sell in May and Go Away” mantra.   Let me know if you want more videos and any suggestions for making them more useful to you.View it full screen to see my charts clearly.

20th Day of QQQ short term down-trend; looking very weak and ominous for the bull case

@ 6:00 am
GMI1/6
GMI-20/9
T210835%

With the GMI at 1 and the GMI2 at 0 I am very reluctant to hold stocks.   My trading accounts have been in cash for over a week.   My university pension accounts remain invested in mutual funds, but I am considering raising some cash if we get a good bounce this week (see below).   Too many sectors look weak, especially the commodities, suggesting to me a weakening worldwide economy. The down-trend in gold has also become stronger. As this daily chart of the QQQ shows, the 30 day average (red line) is now curving down and touching the 50 day average (green dots), and the shorter term, 4 and 10 day averages, are now declining below the important 30 day average. Compare the pattern of the past few weeks with that of the preceding time period.   It does not take a skilled technician to see that the market is no longer in an up-trend. The AAPL chart is very similar to this one. The leaders are no longer charging ahead. This is no time to be brave……

Nevertheless, the QQQ daily 10.4 stochastic is at   oversold levels (just below 20, not shown) and this usually portends some kind of short term bounce in the underlying Nasdaq 100 index, perhaps back to the 30 day average. (The T2108, at 35%,   remains in neutral territory and suggests to me that the market is far from a real bottom.) If the QQQ rallies this week, I may take some of my university pension money off the table.   We have been taught that we must always be invested and cannot time the market—rubbish!!! All successful speculators found that there was a time to exit the market or to be short.   This, I believe, is one of those times. Once a market decline begins, no one knows, except by lucky guess, when and where it will end. Trend followers wait for signs of a turn before they act.

GMI sell signal; in cash; techs look very weak

@ 7:00 am
GMI2/6
GMI-20/9
T210839%

I ran a new PCF in TC2000 this weekend that detects stocks that give a daily sell signal after being over-bought.   I found that 20% of the Nasdaq100 and Dow 30 stocks and 21% of the S&P 500 stocks met this criterion as of Friday’s close. Furthermore, 79% of the Nasdaq 100 stocks closed Friday below their 30 day averages, a key sell signal for me.   I typically sell a growth stock as soon as it looks like it will close below its 30 day average.   Check this signal out, it really works for me.   Why would one want to keep a stock that closes below its average closing price over the past six weeks (or 30 days)? A final blow to this market is AAPL’s inability to rally after its blow-out earnings.   AAPL has now closed below its 10 week average.   Over the years, I have learned only to be in AAPL when its is above its 10 week average.

Most people feel they have to be in the market.   This is the result of years of brainwashing by those who benefit from people holding positions in stocks and mutual funds.   It is much more reasonable to be out of the market during times that appear weak.   One can always reenter the market when things look better, and hopefully, at lower prices.   However, in my university pension accounts, where money is being contributed each pay period, I continue to have new money invested in mutual funds , even after I have transferred the full balance into money market funds when I think we are headed for bad times. I don’t mind investing new money into   mutual funds on the way down, assuming that the market will eventually rebound. I never do so with individual stocks, because a company could go bankrupt, as was the case with GM and Enron and Lehman…..

The GMI is back to 2 and the GMI2 is at 0. With the GMI below 4 for two days, it has given a new sell signal.   The major indexes are back below their 10 week averages and the QQQ has been in a short term down-trend for the past 15 days.   We had a rare period when the GMI was above 4 within a continuing short term down-trend in the QQQ. The QQQ remains in a longer term up-trend, but I have gone to cash in my trading accounts.   My university pension therefore remains invested in mutual funds for now. The Worden T2108 Indicator is at 39%, in neutral territory. If it declines to below 20% I will begin to look for a bottom to the market weakness. This year, “Sell in May and Go Away” may work yet again.