General Market Index (GMI) table

My modified daily Guppy charts show that the RWB up-trends are over and with the major indexes closing below (dotted line) all 12 averages, it is possible we will see BWR down-trends (shorter term red lines declining below blue lines with a white space between them). The key in technical analysis is to be prepared to react once a trend is in. Friday was the 8th day of the current $QQQ short term down-trend. Being long right now is fighting the tide. It is so much easier to profit on the long side when the GMI is Green and the short term trends are up. Here is the daily modified Guppy chart of QQQ. All of the major indexes have similar patterns.  We are in the post earnings release period when the market tends to wander or decline. When the third quarter earnings are released in October, we might see a new up-trend. The post earnings decline sets up the next rise. But rather than predict, I prefer to wait and then react. I currently am in cash and SQQQ and own a little ACHR in my trading IRA.

ACHR is a leader in the new electric vertical takeoff and landing industry. Cathy Wood is buying it and the weekly chart just looks very promising to me. Note the volume the past 3 weeks as ACHR has resisted the market decline. I almost never buy cheap stocks but my stock buddy, Judy,  alerted me to this new industry a long time ago. I posted about it a while ago and I own a few shares as a bookmark. I want to see it hold its rising 4 wk average (red dotted line).

The GMI remains Red. Both QQQ and SPY have closed below their 10 week averages. But the longer term trend of QQQ remains up with the 10 week above the 30 week for the 25th consecutive week.

I am on the defense in my trading account. I hold some SQQQ, a 3X leveraged ETF which is designed to  rise three times as much as QQQ falls. It is the opposite of TQQQ which rises three times as much as  QQQ rises. I noted last post that in the past few years 40% of the new QQQ short term down-trends have ended within 5 days, so I must be nimble and act fast if the current down-trend should end this week.

It is disconcerting that the GMI has now turned Red. While QQQ remains in a Stage 2 up-trend, the GMI is telling me to be on the defensive. Breakouts will be more likely to fail. And with fewer than 100 stocks hitting new highs each day, betting on stocks at new highs to continue rising is a difficult game to play right now. The strength of new highs  is also measured by the first component in the GMI table. Only 34% of the stocks that hit a new high 10 days ago closed higher Friday than they closed 10 days earlier. QQQ has now closed below its 10 week average, a significant sign of technical weakness. The last time this occurred was last March near the beginning of the new up-trend. Unless QQQ should close below its 30 week average I remain invested in my long term conservative accounts.

The 10:30 week chart below tells the story. The gray line plots the weekly closes. The red line is the 30 week average and the dotted line is the 10 week average. As long as the 10 week average is rising above the rising 30 week average it is a strong Stage 2 up-trend.

If QQQ should close below its 30 week average, the sole remaining positive component of the GMI would turn negative and the GMI=0. I exit the market when that happens. Note that the two stochastics indicators in the GMI2 are <20. QQQ is very oversold short term and a bounce could occur soon. I do not follow the GMI2 total at all. The GMI2 table is there just to remind me to record its components after each market close. The GMI2 components are not all positively correlated with the market. Note that SPY and DIA remain above their 10 week averages. The tech stocks in QQQ are the source of its weakness.

Another flat or down day for QQQ on Monday will end the QQQ short term up-trend after 68 days. But about 40% of QQQ short term down trends end in 5 days or less and QQQ’s longer term trend remains up. This 10:30 weekly chart shows that QQQ is in a strong longer term up-trend with the 10 week average rising above the rising 30 week average for its 23rd week. I would become more defensive if the weekly close (gray line) should decline below the 30 week average (red line).

It is disconcerting that AAPL failed its GLB (green line break-out to ATH) on above average volume on Friday.

The GMI has now declined to 4 (of 6).