It looks like TYH, the ultra 3x bull tech ETF, has begun its 5th decline after hitting the top of its short term channel. The longer term trend remains up.
All of my indicators are still in up-trends, with the GMI at 6 and the GMI-R at 10. The Worden T2108 indicator is at 83%, not far from the highest levels that it typically gets to, around 90%. I continue to hold QLD and a few other individual stocks. Meanwhile, the QQQQ has completed the 43rd day of its short term up-trend and has been above its key 10 week average for 9 straight weeks. No one knows when an up-trend will end. We must wait for the critical technical signals. A trend follower must always get out after the top, after the down-trend has revealed itself. The key is to ride the elevator up and exit near the top floor, before it drops to the basement.
I thought you might like to see why we may be at the beginning of a short term decline in the tech stocks. TYH is the 3X ultra long tech ETF and it appears to be in a rising channel. TYH recently hit the top of the channel, which has been followed by a decline four times in the recent past. Nevertheless, the tech stocks remain in a longer term up-trend. The question is whether to sell a little now, or just hold on to see if the channel holds. Regardless, it seems to me that this may not be the time to take on new tech positions. Much better to buy closer to the bottom of the channel, if it holds.
But the long term Stage 2 (a la Weinstein, see his book to lower right) up-trend remains intact. Note, however, that the QQQQ does appear to be a little extended on this weekly chart too, having closed at the bottom of its last 5-day range.
Even as AAPL breaks from base. (All charts built using Worden TC2007)
Note on this daily chart that IMAX broke out to an all time high last week (on huge volume). My extraordinary stock picking friend, Judy, has been talking about IMAX since the stock was around $2. She of course bought it way back back then. It takes a while for the rest of us to catch up to Judy. She says the technical innovations in the recent 3D IMAX release, Avatar, is as big as when movies went from black and white to color. So, I own IMAX and am watching the story unfold.
â€œLast week, a person who knows nothing about the market asked me how to short stocks. This is reminiscent of the stories of the shoeshine boys providing stock tips, near the roaring 20â€™s marketâ€™s top. The sentiment is just too negative right now. Does this mean the market has to turn up? Not necessarily, but the market is always an assessment of competing probabilities. â€œ (Post on 3/8/2009, GMI: 0, T2108: 7%)
I wrote the above words last March, which turned out to be just as the market successfully tested its bear market lows and began the current rise. The Worden T2108 indicator was in single digits, a rare screaming oversold buy signal. When people around me who never traded asked me how to short stocks it turned out to be a key contrary signal that the market decline was near an end. Similarly, I remember when a friend who knows little about the market asked me if he should refinance his house to invest in the market–back in 2000 near that market’s top………
I have noticed that the pundits have been saying that TJX , the discount retailer chain, is a good buy. I therefore was struck by the GMMA daily chart below, which is flashing warning signals. With the short term averages (black lines) now below the longer term averages (red), this is not a stock I would want to own. It may even be a good short play. You do know that analysts sometimes tout a stock so that their big clients can unload their long positions to the unsuspecting public. (The “NA” on the chart shows when IBD wrote about TJX in its New America column.) Another stock with similarly weak technicals is PWRD.
Meanwhile, the GMI and GMI-R