Wishing Wealth Blog

With the put/call ratio=1.16 and T2108 at 17, this is not the time for me to initiate shorts.  That would have been appropriate on Monday when the GMI flashed a Red signal or last Friday when the QQQ short term trend turned down after 63 days of a short term up-trend. Better to be in cash until a bottom is formed. However, if T2108 goes into single digits, I will buy some SPY. That is typically bottom territory. The QQQ has now closed below its critical 30 week average (red line in weekly chart below). The 30 week average would have to curve down for me to think a significant bear market (Stage IV decline) is imminent. IBD now says that the market is in a correction. Both the SPY and DIA have now had failed green line break-outs. Stay tuned….

In the recent past, anytime the daily 10.4 stochastic (red line lower chart) approached 20, the index bounced. As this daily chart shows, QQQ is now registering 21. It has already found support at its lower 15.2 Bollinger Band. If the QQQ fails to bounce soon, this could be an important sign of weakness.

When the GMI turns Red it could signal a significant market down-trend to come. It has also turned Red for a day or two at a bottom. Time will tell. For the moment, I am in cash. The QQQ’s 4 week average (red dotted line) is now moving below its 10 week average (blue dotted line). See weekly chart below.