Wishing Wealth Blog

The GMI fell one, to +5 on Friday because there were only 81 new yearly highs in my universe of 4,000 stocks.  But the GMI-S remains at 100, indicating considerable strength in my short term indicators for four major stock indexes.  Only 30% of the Nasdaq 100 stocks rose on Friday, along with 42% of the S&P500 stocks and 53% of the Dow 30 stocks.  Friday was the 30th day in the QQQQ current up-trend and the index has closed above its 10 week average for seven straight weeks.  It has been a good time to be long the QQQQ (or QLD) and tech stocks.  On the other hand, the mutual fund end-of-quarter window dressing is over and the beginning of October may be soft.  Volume should be light on Monday with the Jewish New Year.  It may take Tuesday for this market to reveal the current short term trend.

I created a new watchlist containing the IBD 100 list published on Monday.  Would you believe that the current list includes only 28 stocks that were on the list from 5/16 and 46 of the stocks on the list on 8/14.  In other words, 72% of the IBD 100 stocks on 5/16 were replaced, as were 54% of the stocks on the list on 8/14.  How can IBD continually compare the IBD 100 stock index with the S&P 500 index, when the IBD 100 list changes so much?  The IBD 100 stock list continually drops off the poor performing stocks and is, thus, incredibly unstable.  The valid way to look at IBD 100 stock performance is to look at how the same list of stocks performed over time.  Thus, only 23% of the stocks on the list on 5/16 closed higher on Friday than they closed on 5/16.  And 49% of the stocks on the list on 8/14 closed higher Friday than on 8/14.  In contrast, 44% of the Nasdaq 100 stocks closed higher on Friday than they did on 5/16 and 87% of them closed higher on Friday than on 8/14.  The Nasdaq 100 stocks greatly out-performed the IBD 100 stocks during these two periods.  It does not appear to be a good idea to run out and buy stocks just because they appear on the IBD 100 list.

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

The GMI held at +6 and window dressing will come to an end on Friday.  Between 53-61% of the stocks in the Nasdaq 100, S&P 500 and Dow 30 indexes rose on Thursday.  There were 170 new highs in my universe of 4,000 stocks.  72% of the stocks that hit a new high 10 days ago closed higher on Thursday than they closed 10 days earlier.  Thus, buying new highs has likely to have been a profitable strategy. The QQQQ is in its 29th day of an up-trend and has closed above its 10 week average for 7 consecutive weeks.  When the QQQQ remains above its rising 10 week average, I typically make money trading on the long side. Since the beginning of the QQQQ up-trend in mid-August, that index has risen 8.3% and 81% of the Nasdaq 100 stocks have advanced; 38% of the stocks are up 10% or more.  Riding with the market trend has produced splendid odds of making a profit.  In comparison, only 51% of the IBD 100 stocks posted on 5/15 have advanced during the same period…

We are now approaching the terrible month of October when many large declines have occurred and important bottoms have been put in.  I have often times gone to cash in October and bought back in in early November.  Studies have shown that the period from November through April contains a disproportionate amount of market gains.  But everyone is so smart now and expects an October decline first, before we get the end of year strength.  With the GMI indicators so strong, this might be the time that October fools the masses.  I would not be surprised to see an early sharp decline followed by a strong rebound that leaves many skeptics behind.

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

The GMI remains at 6, but the QQQQ was the weakest index Wednesday.  53% of the Dow 30 stocks advanced along with 46% of the S&P 500 stocks but only 38% of the Nasdaq 100 stocks.  But there were 202 new highs in my universe of 4,000 stocks and Wednesday was the 28th day of the current QQQQ up-trend.  Only 44% (4/9) of my IBD meet-up members were optimistic tonight about the next few months, suggesting to me that this market will be higher come November.  66%of the IBD 100 stocks from 5/16 and 75% of the IBD 100 list from 8/14 closed higher on Wednesday, suggesting that IBD type growth stocks were stronger on Wednesday.  Seven stocks from the list on 8/14 hit new highs:  FMD, TNL, NITE, GYMB, TWGP, GILD and CTSH.  Some of these stocks might lead a year end up-trend…

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