GMI recedes to 2 (of 6); $SPY looks very weak–Stage IV decline?, in cash

@ 7:23 am
GMI2/6
GMI-24/9
T210826%

There are times when I should just be on the sidelines–like now. We are still waiting to see if the March decline was just the first leg of a huge multi-month decline or a quick bottom. No one knows. Why risk money after getting out unscathed. Declining 30 week average (solid red line) is a major sign of weakness and possible Stage IV decline. If so, the decline is just beginning. Note how easy it was to be profitably invested when the SPY was above its rising 30 week average (Stage II) in much of 2019. Better to wait for a new Stage II up-trend.

 

Since the new $QQQ short term up-trend began, $TQQQ (+33%) beats all but 1 of NASADQ100, S&P500 and Dow 30 stocks.

@ 9:51 pm
GMI3/6
GMI-26/9
T210834%

I have repeatedly shown that the way to beat most stocks during an up-trend is to simply buy the triple leveraged bullish QQQ ETF, TQQQ. As long as the QQQ is in an up-trend, TQQQ rises more than almost all individual stocks. Since my QQQ short term trend indicator turned up on April 7, TQQQ has advanced 33%. Of all stocks in the major indexes (DIA, QQQ, SPY) only TSLA advanced more (+38%). In my big watchlist of IBD and MarketSmith type growth stocks, only 2% (18/809) beat TQQQ. For my time and money, I would rather buy TQQQ in an up-trend than try to identify in advance the rare needle in the haystack stocks that will beat it. My strategy is to take a small position in TQQQ as soon as there is a new QQQ short term up-trend. If the up-trend continues, I add more at higher prices over time. However, because TQQQ also falls 3x faster than the underlying index, I must have a strategy to protect gains.

The GMI remains RED and at 3 (of 6). It could turn GREEN this week. The SPY and QQQ have now closed back above their 10 week averages.