With the GMI and GMI-R at their maximum values, I am invested long in my university pension and my trading IRA. Friday was the 34th day of the current QQQQ short term up-trend. In the recent past, up-trends have lasted as long as 80 days. 
General Market Index (GMI) table
On to the year end rally; some stocks near new highs and bouncing from oversold
The QQQQ short term up-trend completed its 24th day on Friday. During the time of this up-trend, the QQQQ has risen +8.9%, the SPY +6.3%, and the DIA +6.4%. On the other hand the ultra long index ETF’s have done much better, QLD +18.5% and the TYH +26.7%. So, we see again the virtue of buying the ultra long index ETF’s at the beginning of a QQQQ short term up-trend. Eight QQQQ short term up-trends have lasted between 31-86 days in the past couple of years. So the current up-trend may have a ways to go. After we enter earnings season we also enter the November-April part of the year during which most market gains have occurred. So I remain 100% long in mutual funds in my university pension and largely long in my trading IRA and margin accounts. If I listened to the news and the media pundits, rather than my indicators, I would be scared out of equities.
So my GMI is at 6 (of 6) and the GMI-R is at 10 (of 10). The Worden T2108 is at 86%, near over-bought territory but it can remain there for quite a while. 
The SPY and QQQQ have closed above their critical 10 week averages for 6 weeks, a major sign of strength in the up-trend. Only 44% of the Nasdaq 100 stocks closed with their MACD above its signal line, down from 63% last Friday, a sign of some short term weakness. As I wrote last week, I believe the strength in IBM augurs well for a strong Dow and a strong tech rally in the near future.
Meanwhile, my undergraduate students are about to begin their virtual stock trading competition. To help them select stocks this week I ran a special scan of all stocks in my IBD 100 and New America watch list. This scan looked for stocks that have recently hit a new high then became oversold and just bounced off of or broke above their 30 day averages. It also filters stocks on revenue growth and a few other technical criteria. This list of stocks (see scan results below–click on to enlarge) is a starting point for them to research to see if a stock meets their other fundamental and technical criteria. All students must have an objective set of trading rules approved by me before they can trade. My TC 2007 tab shown below lists a host of fundamental and technical criteria (EPS change most recent quarter, prior quarter and annual; PE, price/price a year ago; % change in revenue last quarter; P/S ratio and ROE) and the list is sorted by ROE. If they buy one of these stocks, they should place a stop order to sell (GTC stop loss) somewhere below the stock’s 30 day average. Good luck students!
Rally weakening, T2108= 86% and overbought; RWB: CAT; BWR: UNG
While the GMI and GMI-R remain at maximum values, there are signs this 19 day old QQQQ short term up-trend is weakening. First, the Worden T2108 indicator is in overbought territory, at 86%. In a few instances T2108 has hit 90%, but always at market tops. 
This does not mean that a big decline subsequently ensures, only that things cool off for a while. Furthermore, only 63% of the Nasdaq 100 stocks closed with their daily MACD above its signal line, down from 82% last Friday. The daily MACD (12/26/9) is sensitive to the short term trend. The QQQQ and SPY index ETF’s have now closed above their 10 week averages for 5 weeks. So, the longer term trend is still up. So, we appear to be facing some short term weakness within a longer term up-trend. As I have been writing, we may get weakness in the indexes at the beginning of October until we earnings come out. The tough decision is whether to ride out the weakness or to cut back positions until it is over. I do not have a clear answer, but I am unwilling to give back all of the gains form the past few weeks. My university pension remains 100% invested and I will not touch that now. I may move stops up or buy some puts for insurance on my positions.
Last Monday, I introduced the concept of Red White and Blue (RWB) charts which is the pattern of rocket stocks. Interestingly, there are even some RWB stocks among three Dow 30 stocks: CAT, DD, MCD. So, sometimes even the big-cap, nonspeculative stocks can show consistent strength. Below is the chart for CAT.
A few months ago I thought I saw a bottom in UNG, but I was wrong. The weekly chart below shows an incredible submarine stock pattern (BWR). What a great stock to have shorted the past two years. I would not consider buying UNG until the shorter term averages (red lines) rise above the longer term averages and it becomes a RWB chart pattern.
