General Market Index (GMI) table

The QQQ short term up-trend is now 9 days old.   The Worden T2108 is now at its highest reading (68%) since last July.   There were 85 new 52 week highs on Friday, the most since last July. This market is showing some signs of life.   The GMI is at 4 and could turn 5 on Monday with a strong up day.   The major index ETF’s (DIA, QQQ, SPY) are now above their 10 week averages.   80% of the Nasdaq 100 stocks closed above their 30 day averages and 87% closed with their MACD above its signal line.   All of these   indicators reflect technical strength.   The only technical sign of weakness in my scan is that the QQQ daily 10.4 stochastics is declining from overbought levels and is now at 75.   But this indicator can stop and turn on a dime, or continue until it reaches oversold levels, below 20.   I wrote a while ago that my university pension is now invested 100% in mutual funds again. I am also wading back into the market in my trading accounts.   We are likely in the period when the market is turning and most pundits are skeptical or bearish.   The Investors Intelligence poll of advisers still shows more bears than bulls. That is very comforting, given that the majority is usually wrong at market turns.

Ten stocks hit new highs on Friday and passed my scan for strong technicals and fundamentals: TDY,ENB,SXL,CELG,OKS,QCOR,CASY,CNP,GWW,BBBY.   My undergraduate students should research these stocks for possible purchases in their virtual stock challenge accounts.   Check out when they are scheduled to announce earnings. Below is the weekly GMMA chart for BBBY, which is clearly an RWB rocket stock. (Click on chart to enlarge.)

With the QQQ now back above its 30 week average (solid red line), I am ready to reenter this market. The QQQ, composed of tech stocks, is outperforming the SPY and DIA.

Friday was the 4th day of the new QQQ short term up-trend. AAPL has emerged as a leader again and there is too much bearish market sentiment.

The GMI is now back to 4, reflecting the growing strength in the market indexes.

Check out this weekly chart of AAPL.   It is back above its 10 week average (blue dotted line). Click on chart to enlarge.

With the GMI and GMI-2 each at zero, I have gone to cash.   However, I am 30% invested in mutual funds in my university pension because of trading limits.   The only glimmer of bullish hope that I see is the fact that the Investor’s Intelligence poll of investment advisers still shows more bulls than bears, a very rare occurrence.   The market usually fools the majority of participants.   Everyone is so darn bearish.   This market may be getting ready for a huge bottom to this decline, which is typical of the month of October. The “Sell in May” crowd usually returns around Halloween.

If you take a look at these weekly GMMA charts of the QQQ and SPY, you can see that the shorter term averages (red) are crossing below the longer term averages (blue). The QQQ, which does not contain financial stocks, looks a little stronger than the SPY. Click on charts to enlarge.

For the moment, the present declines do not look that bad compared with the decline in 2008. The SPY looks like we could get a replay of the 2008 rout, but the averages could turn around as they did in 2010.   Better to wait on the sidelines for a significant sign of an up-trend. The QQQ just entered a new short term down-trend.