The major indexes all held at their 30 week averages and the QQQQ is in a strong Stage 2 advance. There were 43 new highs in my universe of 4,000 stocks on Wednesday, the most since September 19th. There were only 6 new lows. The GMI is at 5 for the first time since April 24, and the T2108 indicator rebounded to 65%. I wrote earlier this week that the market was in a short term down-trend within a longer term up-trend. Well, it looks like the indexes found support at their 30 week averages and the short term down-trend has ended. The QQQQ is back above its key 10 week average. I am going long in my trading account and transferring more funds from money market to growth mutual funds in my university pension. It looks to me like we are at the beginning of a Stage 2 advance with the 30 week averages having successfully turned up. See Weinstein’s book, to the lower right, for an explanation of stage analysis, my primary method for determining the market’s major longer term trend. Among the stocks at new 52 week highs on Wednesday that are close to their all-time highs are: LL, AIXG, MVL, ORLY, ROST. Any stock that can come through the past year’s market decline and be trading near its all-time high is a potential market leader that should be watched. I own ROST.
There were 32 new lows on Friday in my universe of 4,000 stocks, the largest number since March 12th! There were only 9 new highs. Friday was the 5th day of the new QQQQ short term down-trend. Why try to fight the down-trend when one can sit calmly on the sidelines? The major positive I still see is that the longer term averages I follow are still curving up. If they should be violated on the down side, I will even go to cash again in my university pension. I remain only 15% invested there. Meanwhile, The GMI
My short term indicators are weakening and a lower close of the QQQQ on Monday would bring the GMI to 2. I am very defensive right now. Only 7 new highs and 9 new lows in my universe of 4,000 stocks on Thursday. The Worden T2108 indicator is now down to 41% and will have to fall below 20 to be in possible bottom territory.