All indicators negative; 12th day of QQQQ short term down-trend


All of my indicators have turned negative again and I am back to cash.   I have considered buying some QID, but with my short term moving averages being flat, I will probably get repeatedly whipsawed as the indexes move above and below their averages.   However, at some point a real tradable trend will develop. There were 3 new highs and 138 new lows in my universe of 4,000 stocks on Friday.   Only 30% of the Nasdaq 100 stocks closed above their 30 day averages and the QQQQ   just completed the 12th day of its short term down-trend.

One of the GMI’s components tracks the percentage of “successful” stocks that hit a new high 10 days ago that closed higher today than they closed 10 days ago.   It is a useful indicator to see if break-out stocks are continuing to advance.   This indicator has been negative since late October,   largely because we rarely saw the required 20 new highs in a day.   You can see this indicator is still negative in the GMI table below….

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I’m up 1200%, as my fellow boomers and college students get screwed again; QQQQ in 17th day of short term up-trend; GMI: 2; GMI-R: 6; T2108: 83%; 10 IBD100 stocks at new highs

I escaped 2008 with a small loss in my account (-5%).   Not bad, compared to how the indexes did (down 35-40%), but not great, given that I did trade some short positions (with puts) during the year.   On December 24, IBD published a table listing the performance of the best growth mutual funds since April, 1994.   The top fund was up +382% since 1994.   My IRA account remains up a little more than 1200% (13x) since late 1994, so I do not feel that bad about my performance this year.   The key to my success is that I made money during the strong market rises and kept it, by being mainly out of the market during the major declines.   I might add that while I traded in my IRA during the huge declines in 2000-2002 and 2008, I avoided major losses in my university pension plan by transferring from mutual funds into a money market fund during these declines.   So, I have learned the painful lesson over my 40+ years of trading that the key to success is conservation of capital during the inevitable market down-trends.   These declines can be detected   long before they reach the panic phase when they become evident to everyone. I have developed rules for identifying the market’s trend early, that I post each market day in this blog, in the form of the GMI and GMI-R…..

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