GMI back to 5; QQQQ short term up-trend completes 5th day; UNG

GMI5/6
GMI-R9/10
T210878%

The GMI rose back to 5 (of 6); there were 102 new 52 week highs in my universe of 4,000 stocks on Thursday.   While my longer term indicators remain down, this short term rally in the Nasdaq 100 stocks (QQQQ) is still intact, having lasted five days.   I am beginning to look at the natural gas ETF   (UNG) again and have taken a small long position because it looks to me like it has bottomed.   UNG has not confirmed a new longer term up-trend, however.   (A close above 8.26, its 30 week average, would be quite bullish.) But since it is a valued commodity, I do not see much chance that it will fall to zero!   UNG gave me a short term buy signal when its stochastic became oversold and then UNG closed back above its key 30 day average.   If UNG declines back below this average, currently 7.84,   I will sell my position.

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For those of you who are first time readers, welcome!   I want you to know that I write this blog to share my experiences gained from trading over more than 40 years. I also write this blog to educate my students at the University of Maryland, who are enrolled in my classes on technical analysis of stocks.   I am passionately committed to educating people about trading because I believe that our education system has failed to prepare its citizens for their financial survival.   My students learn to greet assertions and   advice from the pundits in the financial media with a heavy dose of skepticism and their own critical analysis.

As a part-time trader, I have educated   myself through extensive reading of the works of successful traders and through analysis of my own trading performance.   I bring my training as a research psychologist to the subject of trading. I have been able to multiply my IRA 14x since 1995 and have been able to keep my university pension safely in cash during all of the major market declines since 1998, and to reinvest the funds in the subsequent advances. My university pension has been spared the scars and heavy losses from the declines in 2000-2002 and 2008.

I rely heavily upon my General Market Index (GMI) to keep me on the same side as the major market trend.   The GMI is a simple count of the six indicators that I use to gauge the market’s short and longer term   trends. I exit to cash when my indicators signal a major down-trend, usually when the GMI is below 3. I wade back into the market slowly when the GMI recovers. I do not predict the length of trends, I try only to ride them until they end. The few excellent books that made a difference to my trading are posted to the lower right of this blog, and most are required reading before my students are allowed to formulate trading rules and test them in a virtual trading exercise.   I compose each daily post after the market close, and publish it on Monday through Friday around 7:00 AM EST. While I publish the GMI reading every post, I present the GMI’s full components only on   Monday morning. I hope that readers will benefit from my experiences and apply whatever they find useful to their own trading.   I am empowered by your comments and ask that you give me feedback in the comment section of each post, or send them to me via email at:   silentknight@wishingwealthblog.com.

GMI falls to 4 as longer term up-trend is in question

GMI4/6
GMI-R8/10
T210877%

One reader questioned my writing that “the train has left the station” a couple of days ago.   I think I was too early in my call.   I like to describe the trend and not predict it.   Furthermore, I write often that when I think the trend has changed, I wade very slowly into the market. I remain largely in cash right now.   There were less than 100 new 52 week highs in my universe of 4,000 stocks on Wednesday and my weekly QQQQ trend indicator is now negative.   This is why the GMI declined   2 points.   While my short term trend indicators remain in up-trends, the longer term trend is flat.   It is too early to call a new long term up-trend.     We are still in a market fraught with whip-saw moves, not one for me to be heavily invested in. The chart below shows the daily GMMA for the QQQQ.   Note that some of the short term averages (black) are now above the longer term averages (red). Only time will tell if this is the beginning of a multi-month up-trend like the one that began last March.

GMI: 5; T2108: 78%; Looking to go long

GMI5/6
GMI-R7/10
T210878%

I was prevented from completing my blog post this weekend because we lost power during the storm Sunday afternoon.   I still lack power, and will do a full post when it returns and I can get on my home computer.

The only indicator still negative is the QQQQ Weekly Indicator, which means the longer term trend remains flat or down.   We are close to a turn, however, and then the GMI would equal 6.   There were 178 new 52 week highs on Friday in my universe of 4,000 stocks.   I will look for buys among these stocks which held up during the recent market turbulence.

One negative, with the T2108 at 78%, it is getting near the level where markets have topped. I always wade into the market slowly when I think the market trend is turning.