General Market Index (GMI) table

I introduced the concept of green line charts a while ago. I draw a green line when a stock on a monthly chart hits an all-time high which is not closed above for three months.   I then wait for the stock to break through the green line top to a new all-time high.   Rocket stocks form a set of green line tops. They rise to a peak, consolidate for a few months and then burst through to a new high. The idea is to buy a little at the break-out and to add more as long as the stock does not retreat back below the most recent green line.   So, each evening I run a TC 2000 scan for a list of stocks that hit all-time highs and then draw in the last green line top on each stock.   If the stock has recently (within a week or two) broken out above a green line, I research it further for a potential buy, as long as the market remains in an up-trend. With the GMI at 6 (see table below) , I am looking for green line break-out stocks to buy.

On Friday,   TRIP came up in my daily new high scan.   The monthly chart below shows that TRIP has broken above its green line top this month.   It is also a relatively recent IPO, having come public in December, 2011.

The weekly chart below shows the green line I drew on the monthly chart.   It looks like TRIP has just broken out of a cup with handle pattern on above average volume (not shown), another   sign of strength.

With an IBD Composite Rating of 99, TRIP   is a stock I might buy on Monday.

The GMI is now on a Buy signal even while the QQQ just reached the 7th day of its short term down-trend.   There were 240 new highs in my universe of about 5,000 stocks and 87 new lows on Friday.   I am waiting to see whether the QQQ can mount a real rally or whether it will complete a head and shoulders top. Meanwhile, the DIA and SPY are in strong RWB weekly up-trends and approaching their all-time highs.

I will be attending the Worden training workshop in late March (3/22 or 3/23).   Register for the free workshop at worden.com. This is how I learned how to use their wonderful TC2000 technical analysis software.

I am concerned that the chart below suggests to me a possible head and shoulders top formation.   The blue line shows the daily closes of the QQQ and the red line shows the   moving average of the closes over the prior 30 days. Note that the QQQ has now closed below its 30 day average, a possible sign of weakness.   In addition, the left and right shoulders peaked at almost identical closing price levels, as shown by the green line.   This week is critical to determining whether a major decline in the QQQ is beginning.   If the right shoulder breaks down and the neckline is penetrated, the head and shoulder top pattern is forecasting around a   20% decline in the QQQ from current levels, to around 54. Interestingly, the large cap indexes, the Dow 30 and the S&P500, do not share this weak pattern. I never trust a change in the short term trend until it lasts 5 days.   Friday was only day two of the new QQQ short term down-trend.

Thus, on Friday the GMI and GMI-2 each rebounded to 5 (of 6).   But note that only 20% of the Nasdaq 100 stocks closed with their MACD above the signal line, a sign of short term weakness. The red and green arrows show previous GMI buy and sell signals.   The GMI remains on a buy signal since January 2nd. With such conflicting signals, it is best for me not to place huge bets in either direction.