The more sensitive GMI-R rose to 3 (of 10). 82% of the Nasdaq 100 stocks rose, and 49% closed above their 30 day averages. There were 11 new highs and 121 new lows in my universe of 4,000 stocks on Tuesday. Among the 11 stocks at new highs were 4 stocks on my IBD100 lists: DLTR, ESI, MYGN and SXCI. Three other education stocks were on the new high list: COCO, CECO and LINC. Clearly, this sector is a stand-out in a down market. I remain mainly in cash.
The GMI-R climbed to one (of 10). There were 9 new highs and 214 new lows in my universe of 4,000 stocks on Monday. The last time we had over 200 new lows was on January 20th. In contrast, the most daily new highs this year was 20, on January 2nd. The QQQQ completed the 13th day of its current short term down-trend. Nevertheless, the key moving averages are flat and have all converged. At some point a new trend will break out. Some stocks are looking strong. Among the new highs today were two stocks on my IBD100 lists: ESI and SXCI. The strongest group I have found is the education and training services group: APOL, CECO, COCO and ESI are doing incredibly well in this declining market. During hard times, people go back to school.
All of my indicators have turned negative again and I am back to cash. I have considered buying some QID, but with my short term moving averages being flat, I will probably get repeatedly whipsawed as the indexes move above and below their averages. However, at some point a real tradable trend will develop. There were 3 new highs and 138 new lows in my universe of 4,000 stocks on Friday. Only 30% of the Nasdaq 100 stocks closed above their 30 day averages and the QQQQ just completed the 12th day of its short term down-trend.
One of the GMI’s components tracks the percentage of “successful” stocks that hit a new high 10 days ago that closed higher today than they closed 10 days ago. It is a useful indicator to see if break-out stocks are continuing to advance. This indicator has been negative since late October, largely because we rarely saw the required 20 new highs in a day. You can see this indicator is still negative in the GMI table below….
The GMI rose to 1 (of 6) and the more sensitive GMI-R to 4 (of 10). There were 5 new highs and 21 new lows in my universe of 4,000 stocks on Wednesday. The QQQQ will change to a short term up-trend, if it holds on Thursday. I sold my QID and bought a little QLD. I will accumulate QLD (the ultra long QQQQ ETF) if the up-trend gets going. The key is to start with a small pilot buy and to increase my position only if the trend continues. I also set close stops in case the trend weakens. In this way I have the greatest position (and risk) only after the movement is consistent with my initial purchases. I learned this strategy from the great Jesse Livermore (see Reminiscences book by Lefevre below), who made small pilot buys and then pyramided up only if the market confirmed his judgment. I never add to a losing position. I hope to get in on a trend that will last for weeks or months, not minutes or days.
The GMI-R rose to one on Wednesday. The QQQQ completed the 9th day of its short term down-trend. However, the QQQQ is just below its critical moving average. A rise from here could turn the short term trend positive. The market seems able to hold up under a flood of bad earnings. So, the selling may be done for now. This appears to be a time of considerable back and forth in the market. I remain mainly in cash.