GMI: 2; GMI-R: 4; T2108: 43%; 2nd day of QQQQ short term up-trend; Bill Miller’s fall

@ 12:01 am

The short term uptrend remains intact, with the GMI at 2 (of 6) and the GMI-R at 4 (of 10).   The Worden T2108 indicator is at 43%, the highest since last September and well out of bottom territory.   Tops often occur when the T2108 is at 70% or better.   Another sign of strength is that 68% of the Nasdaq100 stocks closed above their 30 day averages, the most since August 28th.   And the dollar may be breaking its up-trend, causing gold and other commodities to rise…..

If you got a chance to see the Wall Street Journal on Wednesday, you may have read the sad story about Bill Miller’s fall from grace.   This icon of buy and hope and addiction to value has seen his fund and his career get shattered.   It is very depressing that such a good stock picker apparently had no plan to abandon stocks that developed down-trends.   Fundamental analysts kept telling him how undervalued his stocks were, even as many became more and more undervalued, and descended into oblivion. We need to remember that “value” is a myth.   As Nicolas Darvas wrote, the only reason to buy a stock is if it is rising; if it is not rising there is no reason to own it.   I   hope Bill Miller can keep his job and that he learns from his painful experience.

GMI: 2; GMI-R: 4; 1st day of QQQQ short term up-trend; Buying QLD

@ 12:01 am

The GMI remains at 2 (of 6) and the more sensitive GMI-R is at 4 (of 10).  There were 3 new highs and 40 new lows in my universe of 4,000 stocks on Tuesday.  Tuesday was the first day of a QQQQ short term up-trend.  The QQQQ is sitting on support and we will have to see if the new up-trend has legs.  If it can hold for at least 5 days, it has a good chance of being a trade-able up-trend within a longer term down-trend.  The past QQQQ down-trend lasted for 69 days.  Before that, we had an 18 day up-trend.  The only way I know how to play this is to buy a little QLD and keep buying it on the way up.  If the up-trend fails, I will get out with a small loss. I remain mainly in cash with some QLD. 

GMI: 2; GMI-R: 4; Up-trend imminent? T2108: 38%

@ 11:00 am

The GMI has risen to 2 (of 6) and the more sensitive GMI-R to 4 (of 10).  Monday was the 69th day of the current QQQQ short term down-trend–and if the QQQQ holds today, it will be the start of a new short term up-trend.  While my longer term indicators remain in a down-trend, this looks like the first short term up-trend in  the QQQQ since the last one ended on August 29.  63% of the Nasdaq100 stocks closed above their 30 day average, the most since August 28.  The Worden T2108 indicator is now at  38%, the highest level since September 19, and well out of bottom territory.  Over 90% of the stocks in the Nasdaq100 and S&P500 stock indexes have a MACD above their signal line.  Bottom line:  This is not a time for me to be short.  I have begun to nibble at the ultra-long indexe ETF's, DDM (for the Dow) and QLD (for the Nasdaq100).  But, my major buying will come if these indexes hold on Tuesday.  I always wade in slowly and only add to my position if prior purchases are showing a profit.  When I am crossing the street and a truck is bearing down on me, I do not argue about its presence or hope that it will stop–I get out of the way or jump on board.  If a new up-trend becomes evident, I will jump on board. The reasons for the change in trend always become clear well after the turn.