GMI: 0; GMI-R: 0; 20th day of QQQQ down-trend; Worden T2108: 9%–bottom territory?

@ 12:51 am

The GMI and GMI-R remain at zero.  Fortunately, my account rose on Monday and I hope my readers were in cash or short, too.  There were an amazing 1,066 new lows and 12 new highs in my universe of 4,000 stocks on Monday.  This was the highest number of new lows since 1,453 on January 22nd. The Worden T2108 indicator is at 9%, an extreme low level for that indicator, typical of past market bottoms.  Only the bottom in the 1987 crash had a much lower reading, less than 1%.  This is not the time to make new short sales.  It is very likely that the market is at a bottom, at least for now. Watch for a rise in the Dow on unusually high volume.  Meanwhile, the safest course is to remain in cash on the sidelines until the GMI rises to at least 3.

GMI: 0; GMI-R: 0; 19th day of QQQQ down-trend; Nicolas Darvas on staying out of bear markets

@ 12:01 am

My two GMI indicators remain at zero.   Friday was the 19th day of the current QQQQ down-trend.   There were only 5 new highs and 189 new lows in my universe of 4,000 stocks on Friday.   The Worden T2108 indicator is at 22%.

I have been writing about how I remain largely in cash during market declines.   A lot of people think highly of Nicolas Darvas, who made a fortune in about two years of trading in the 1950’s (see favorite book list to lower right).   In his later book written in 1977, Darvas wrote:

“Of course there are exceptions to the rules.   There have been any number of stocks that have multiplied in price manyfold in a bear market, just as there are plenty of stocks that have hardly moved in a bull market.   But my temperament is such that I prefer to be safe than sorry.   So I keep out of a bear market and leave such exceptional stocks to those who don’t mind risking their money against the market trend.” (You Can Still Make It In The Market, 1977, p. 126).

I too have found my odds of profting are much better if I trade consistent with the market trend.   So, I remain mainly in cash and hold a few puts in my IRA.