My account rose again on Monday as my positions in GLD and short index ETF’s gained. Again, people have been misled down the buy and hold path, only to see their assets evaporate. People just do not understand that it is fine to be out of the market during rough times. Most have been scared into the market by the pundits who say that the market always comes back or that they might be hurt by missing the best market days if they are in cash. That is so much rubbish! One can always renter the market after a new up-trend has begun. Real up-trends last for months, if not years. Monday was the 23rd day of the current short term down-trend. During that time, the Nasdaq 100 index has declined 8% and 92% of its component stocks have declined. In the same time period, 93% of the S&P500 stocks also declined. Why would anyone try to hold stocks during a down-trend, hoping that his/her stocks would rise?
What is copper telling us about the world economy? In GLD, short, and in cash
So many of the indicators and stocks I look at are looking very weak. A lot of people say that copper prices are correlated with economic growth. Copper is a key material in so many products related to building and economic development. While looking at my watchlist of indicators, I happened to see this weekly chart of copper. 
By my analysis, copper looks like it is getting ready to enter a major Stage 4 (See Weinstein book below for a discussion of stage analysis) down-trend. I can’t trade futures in my IRA account and I can’t short stocks. But I could buy some put options on SCCO, whose chart tracks the price of copper quite closely. Regardless, I think that this chart of copper is an ominous sign for the world’s economy…..
Another ominous sign is that the GMI and GMI-R are each at zero. The markets are in short and longer term down-trends and it makes no sense to hold stocks or long positions now, except for gold (GLD). So I am short a few index ETF’s and own GLD.
I do not know how long this decline will last, but things do not look good right now. Friday was the 22nd day of the current QQQQ short term down-trend. The Worden T2108 is at 19%, which is in oversold territory but not at an extreme level. One promising sign is that 54% of the Nasdaq 100 stocks had their MACD above their signal line, a sign of short term strength.
Anyone hanging on to long positions probably has an addiction to trading or gamboling. One needs to have a plan to minimize market risk. It is so much easier to make money owning stocks when the GMI is above 3.
IBD says market in new up-trend; I am not yet convinced; Some possible rocket stocks
According to my trend rules, the QQQQ just completed the 21st day of its short term down-trend. The longer term weekly indicator is now positive, making the GMI one. And the Worden T2108 Indicator is now at 23% and out of deeply oversold territory. IBD has reported that the Nasdaq Composite has now had a follow through day on the rally that began last week and that the market is now in a confirmed up-trend. They may be right, but I need more of an advance before I would identify a new short term up-trend. The GMI-R is now at 4 of 10, and this index is more sensitive to short term changes in trend. So, I remain mainly in cash in my IRA, waiting to see if we get a definitive up-trend.
Meanwhile, if a new up-trend is imminent, one place to look for new leaders is in the small list of new daily highs. The following stocks hit new highs on Thursday, are near multi-year peaks, and should be watched: MCK, AMMD, CSTR, QSFT, RDY, DGIT*, VASC, GIS, TGH, DTV*, UHS, ALK, THS, CMG, NTAP, WPI, SAM*, ABC, NEOG, LNCR, DISCA, EPB, CRM, EW. I suspect that within this list are some new market leaders, if the market trend turns up. The three stocks with an asterisk reported triple digit earnings increases for the most recent quarter.