Wishing Wealth Blog

The GMI closed at 6 and the GMI-S rose to 100.  Thus all of my short term indicators for four index ETF’s (DIA, QQQQ, SPY, IJR) are positive.  The market weakened on Friday with only 30-37% of the stocks in the Nasdaq 100, S&P500 and Dow 30 indexes rising.   Nevertheless, 72% of the stocks in my universe of 4,000 closed above their 10 week averages.  The QQQQ is now in its 35th day of an up-trend.  If I had been listening to the media pundits, I would have missed this delicious rally.  Remember, the go away in May crowd returns around November.  Most market gains come between November and April. So why are so many market pundits bearish.  Did you note that several days ago when the market had a decline the put/call ratio hit 1.07.  Usually people become that bearish after a long decline.  To find higher volume in puts than calls shows how skeptical traders are of this market rally.  Remember, option traders  usually bet on the wrong side of the market.

I am introducing a new table on the performance of the IBD 100.  So many readers come to my blog because they are interested in this list that IBD publishes each Monday, containing the strongest stocks, according to their CAN SLIM technique.  While I like the CAN SLIM technique, I think that IBD overstates the perfomance of the IBD 100 stocks when it compares its IBD 100 Index to the S&P 500 Index.  IBD replaces poor performing stocks in the list each week with stronger stocks, thus biasing the results towards only stocks that do well.  In contrast, the S&P 500 index stocks change very infrequently.  So, the most valid way to look at the performance of the IBD 100 stocks is to look at how each individual list does over time.  This table shows that for the lists published on 5/16, 8/14, and 10/02.  It is interesting that only 30% of the stocks on the list published last Monday rose on Friday.  Furthermore only 65% of the stocks from 10/02 closed higher on Friday than they closed on the Friday just before the list was published.  The lists from 8/14 and 5/16 did much worse, with only 51% or 28% closing higher on Friday than on the date the list was originally published.  There were seven new yearly highs in the list from last Monday, and they are listed in the table.  Let me know if you want me to continue to update this table…..

RIMM is an interesting stock.  It gapped up on 9/29 when it raised its guidance for future sales and earnings.   I thought I had missed the stock.  But when I looked at its monthly chart I could see that RIMM has blasted out of a 21 month long consolidation and I bought some.  RIMM may be just begining its up-trend…..

Another stock that I think may be starting a run is GOOG.  It has been consolidating since last January and forming what looks like a triangle.  After a few false starts, GOOG may have broken out last week, and I bought some.

Please send your comments to:  silentknight@wishingwealthblog.com.

The GMI continues at the maximum level of +6. There were 337 new yearly highs in my universe of 4,000 stocks.  79% of the 151 stocks that hit a new high 10 days ago closed higher on Thursday than they did 10 days earlier.  Thus, buying stocks at new highs has been profitable.  Only 65% of the Nasdaq 100 stocks rose on Thursday, along with 60% of the S&P500 stocks and only 43% of the Dow 30 stocks.  Thus, the market was much weaker on Thursday.  Thursday was the 34th day of the QQQQ up-trend and the QQQQ has closed above its 10 week average for eight weeks….

The IBD 100 stocks were stronger than the other stocks today, with 81% of the stocks on the list published last Monday advancing; 16 of them hit a new yearly high.  Over the past few weeks I have owned the QLD, which is leveraged so that it moves about twice as much as the QQQQ.  Since 8/15 when this up-trend began, the QQQQ has advanced 10.08%, while the QLD has advanced 19.92%.  It has been easy to make money just holding the QLD.  There is also an ultra ETF for the DIA.  While the DIA advanced 5.67% since 8/15, DDM advanced 11.69%.  These Ultra ProShares are the best kept secret on Wall Street.

Please send your comments to:  silentknight@wishingwealthblog.com.