GMI: 6; Leaders strong; FTO

@ 10:20 pm

The QQQQ is in the 41st day of its up-trend and the leaders are strong.  There were 455 new 52 week highs in my universe of 4,000 stocks.  Gmi0531 The QQQQ and SPY have closed above their 10 week averages for ten straight weeks.  Many  stocks are strong and have broken out.  Still, gloom and skepticism are abundant and many pundits do not embrace the current up-trend.  This market is climbing the proverbial "wall of worry."  Leaders like RIMM, AAPL and GOOG are rising.  Many stocks are breaking out, especially energy stocks.  One stock I noticed the other day is FTO, which rose ten fold between 2004-2006 and then consolidated for 10 months. FTO recently broke out to an all-time new high. Fto  (See monthly chart below.) I bought the stock and have written covered calls on it which are due a week from Friday.  I am currently 100% long on stocks in my IRA.  I have learned yet again the value of flying on instrument and not by my emotions.  Each time the market appeared to be weakening, it has held the support levels I monitor.

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GMI: 4; GMI-S: 63; Critical juncture

@ 12:01 am

The GMI has fallen to 4 for the first time since March 20.  If the QQQQ fails to hold 46, the GMI will likely slip below 4, the point at which I begin to get defensive.  There were only 77 new 52 week highs in my universe of 4,000 stocks on Friday.  The Worden Indicator T2108 (% of stocks above their 40 day averages) is now at 56%, down from a high of 80% in April.  The pendulum is thus swinging down, and whether it reverses before it reaches a market low below 25% is anyone’s guess.  My similar indicator which tracks the percentage of Nasdaq 100 stocks closing above their 30 day aGmi0525_2verages, is now at 49%, down from above 80% in late April, the lowest it has been since last March when the percentage was rebounding from a low of 11% in early March before the current rally began.  So, we have some signs that this market is weakening.  In addition, the MACD for the daily QQQQ is declining below its signal line and the MACD for the weekly QQQQ has failed to confirm the latest peak in that index.  All of these indicators make me nervous about this market and I will watch it closely for signs of a crack.  The key is to not jump the gun, but to wait for the market to change direction.  For now, the trend is still up.

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