21st day of $QQQ short term up-trend; Market had a “dead cat bounce?”


While the QQQ remains in  short and longer term up-trends, I am dubious very short term because the actions of the daily technical indicators I follow are not consistent with the market’s bounce at the end of last week. During the beginning of the rise in the QQQ that began around April 19 (A) the daily 12.26.9 MACD was rising above its signal line as shown by the histogram’s rising and turning black (B). Similarly, the 10.4 stochastic was rising above its 10.4.4 signal line (C). These 2 short term indicators were strengthening along with the QQQ’s rise. Compare that pattern to  last week’s action. While the QQQ started back up (D) the MACD histogram declined and turned red (E) and the stochastic declined (F). This bearish divergence between the action of the QQQ and these 2 indicators suggests to me that Thursday’s and Friday’s rises in the QQQ may have been the proverbial dead cat bounce and should not yet be trusted. (The DIA and SPY exhibit the same divergence.)  Of course if these indicators reverse up this week, I might jump back on the train.

Meanwhile the GMI is at 5 (of 6) and still on a Green signal.

GMI falls to 3; Dow Transports at H+S neckline; Sell in May?


I am almost 100% cash in my trading accounts. My little voice said “this is too easy,” on Tuesday, a reliable signal for me, typically occurring at market tops, reflecting the fact that most of the stocks I follow were rising unusually fast. This weekly chart of the Dow Transports shows it to be right at a possible Head and Shoulders top neckline. Will it hold?

The daily RWB pattern of  the Dow 30 industrials is now gone, with a 0/0 pattern. This means the Index closed (dotted line) below all 12 Red and Blue averages. The up-trend will likely resume when it has a 6/6 reading again. Sell in May may work this year.