The QQQQ remains in a nice up-trend and I am long stocks. We are in the period when few pundits believe the rally is justified. That is okay with me. I just ride the train as it goes in the right direction, until it turns. Two stocks I have been riding, PEGA and SXCI, have had nice break-outs. However, I still prefer to concentrate in the ultra QQQQ ETF, QLD.
The market up-trend is in place and I am almost 100% invested on the long side in my trading IRA. I am also largely invested in mutual funds in my university pension. This is the time to ride the train and not to fight it. No one knows when the up-trend will end. The idea is to ride it and have sufficient stop losses in place to exit if the trend should convincingly reverse. The GMI is at 5 of 6, having been at 6 at Thursday’s close. There were less than 100 new highs (74) in my universe of 4,000 stocks on Friday, bringing it down to 5. I suspect we will be back to 6 this week. Meanwhile, 84% of the Nasdaq 100 stocks had their MACD close above its signal line, a nice show of strength. The Worden T2108 Indicator is at 88%, near the top of the range it typically reaches. But it can stay above 80% for months.
The up-trend continues but the T2108 is at 85%, about as high as it gets. That does not mean we will get a decline, for it can stay above 80% for weeks. I went to an investor’s group meeting this weekend and was amazed to find that many sophisticated investors are resisting this rally. About two thirds expected an imminent market decline. I am incredulous that people would rather fight a trend than ride it. If one puts in stop losses to control risk, why not ride the market until it falters. No one can consistently know when a trend will end. Stop guessing! Meanwhile, the GMI
To be successful in the market, I have to block out all other opinions and look at what the market is telling me. The market successfully tested support last week and the 30 week averages for the SPY, QQQQ and DIA are turning up. This is a classic Weinstein Stage 2 pattern. I get out of the market when the 30 week averages turn down and back in when they turn up. I know this seems simplistic and naive, BUT IT WORKS!! It keeps me on the right side of the market’s primary trend. And 70-80% of stocks follow the general market’s trend–end of story. The GMI is in an up-trend mode, going between 4 and 5.
There were 32 new lows on Friday in my universe of 4,000 stocks, the largest number since March 12th! There were only 9 new highs. Friday was the 5th day of the new QQQQ short term down-trend. Why try to fight the down-trend when one can sit calmly on the sidelines? The major positive I still see is that the longer term averages I follow are still curving up. If they should be violated on the down side, I will even go to cash again in my university pension. I remain only 15% invested there. Meanwhile, The GMI