My indicators remain at low levels. The Worden T2108 remains at 2%, the lowest reading since at the 1987 crash. There were 21 new highs and 2,283 new lows in my universe of 4,000 stocks on Wednesday. This was the largest number of daily new lows since I began this site 3 years ago. Remember–no one knows a bottom or top until after it has occurred. Most bear and bull market labels are assigned months after a turn. If no one knows a bottom until after it has occurred, then trying to guess a bottom is a fool's game. We can only discern the current market trend and trade consistent with it. When the GMI returns to 3 or above, the market will be in an up-trend and it wiill be safe for me t0 own stocks on the long side again. Once the market turned in 2003, my account rose over 50% in a year. The key to success in the market is to win big during the up-trend and to conserve those profits during the subsequent delcine.
GMI: 0; GMI-R: 0; Worden T2108: 2%; But only 1,296 new lows Tuesday
We may be getting close to a bottom or a bounce. The Worden T2108 is now at 2%, the only lower reading since 1986 was during the October 1987 crash when it reached 0.5%. This indicator means that only 2% of NYSE stocks closed above their average closing price over the past 40 days. However, in spite of the large decline on Tuesday, there were considerably fewer new lows in my universe of 4,000 stocks than the day before, 1,296 vs. 2,119. So, not as much weakness was exhibited on Tuesday as on Monday.
The best strategy is to stay out of the market or to be short. Even Jim Cramer is now telling people to get out of stocks if they may need to use their funds in the next five years. But most advisers are buy and hold, value addicts. By now we should all see that value is a myth in the market. A stock is only worth what someone will pay for it. Don't be scared into this market. We do not need to be in the market all of the time. Every meaningful up-trend lasts for months, if not years. There is plenty of time to get back into the market after a bottom is in and a new up-trend proves itself. When the GMI rises to 3 or more it will be time for me to tiptoe back into this market. And remember that the market, which always looks forward, will turn while the economic news is still bad.
Thank you again to all who have sent me messages about how they have used the information from this blog to protect their investments.
GMI: 0; GMI-R: 0; T2108: 4%; 2,119 new lows; indicators at extreme lows
My indicators are at some of the lowest levels possible. Only the 1987 decline reached a lower level on the Worden T2108 indicator than the 4% reached on Monday. In the three years of my blog, I have never found that anything near 2,000 stocks in my universe of 4,000 stocks hit a new 52 week low. There were 21 new highs and 2119 new lows on Monday. Only 3% of the Nasdaq 100 stocks closed above their 30 day averages. Monday may have been the low for this bear market, but we must wait to see if it holds. Bear market bottoms are usually retested several times, so we must wait until the market reveals if we have reached a true bottom. Meanwhile, Monday was the 25th day of the current QQQQ short term down-trend. (This short term down-trend occurs within a longer term down-trend.)
Thank you to the many readers who sent comments about how this blog has helped them to avoid losses during this decline. I am inspired by your commitment to managing your funds during these tough times.