GMI: +6; Up trend continues

The GMI remains at +6.  There were 541 new highs and only 12 new lows in my universe of 4,000 sotcks on Monday.  Gmi0109 Between 59%-64% of the stocks in the Nasdaq 100, S&P 500 and  Dow 30 indexes advanced.  76% of the stocks that hit a new high 10 days ago closed higher on Monday than they closed 10 days earlier.  More than one half of stocks (53%) are now in a short term up trend and 78% closed above their 10 week averages.  37% of the stocks that have doubled the past year hit a new high on Monday.  An amazing 35% of all stocks are within 5% of a yearly high and oly 3% are close to a new low.  Monday was day 3 (U-3) of the QQQQ up trend.

Please send your comments to:  silentknight@wishingwealthblog.com.

GMI: +6; Huge turnaround; short rates to rise? 38 leading stocks

The short term trend of the market has turned up and is now in synch with the longer term up trend.  The GMI is at +6.  there were an amazing 505 new yearly highs among the 4,000 stocks in my universe.  Gmi0106 The last time we had over 500 new highs was on July 28  (522 highs), just before the August 2nd top in the QQQQ.  At that time, however, 81% of stocks were above their 10 week averages, compared with 76% on Friday and 57% were in a short tern up trend compared with 49% on Friday.  Moreover, last July the QQQQ had been rallying for about a month, while the QQQQ short term trend just broke out again last week.  Friday was the second day of the new short term up trend (U-2).  The leaders have been very strong.  82% of the stocks that hit a new high ten days ago closed higher on Friday than they closed ten days earlier.  And 80% of the stocks that have doubled in the past year closed above their 30 day averages and 31% hit a new high on Friday.  Eight times as many stocks are within 5% of a new high than a new low (33% vs. 4%).  With this turnaround, the QQQQ has now closed above its 10 week average for nine consecutive weeks.

The WPM reflects this huge turnaround.  Wpm0106_1 All five indexes closed above their 30 day averages, and 61% or more of their respective component stocks have now closed  above their 30 day averages.  All indexes remain above their longer term 30 week averages, but many more of their stocks (60%- 77%) also closed above their 30 week averages.

A lot of this rally is said to be predicated on the hope that the Fed will soon stop raising interest rates.  I want to bring to your attention, however, the fact that speculators seems to be betting on higher rates. Irx0106 The short term interest rate indicator that we have posted a few times has again broken out to the up side.  Why is the smart money betting on still higher rates? This market could reverse down quickly if the hopes for a slowing Fed fail to materialize……..

So what are some of the leaders that are hitting new highs?  I found 38 stocks that hit a new high on Friday, that doubled in the past year and that had triple digit earnings gains the most recent quarter. Here they are: DO, AKAM, HSVLY, MSCC, ASTE, VTS, ATI, FCX, PDC, GOOG, GG, CRM, SPSS, TRID, AAPL, STMP, UBB, SUN, BOOM, ARD, TRAD, MDR, JOYG, FCL, VPI, SIRF, BTU, NVDA, PKS, ENG, ANST, CIG, WDC, KEP, AIR, TWIN, FLSH, ALY.  I own two of them.  If I were looking for future winners, I would check out this list of winners.

Please send your comments to:  silentknight@wishingwealthblog.com.

GMI rises to +6; new QQQQ up trend

I did not post yesterday.  I had a cold and could not rally, even though the market did.  The GMI is now at +6, and the market internals have strengthened. Gmi0105  More than two thirds (67%) of the stocks that hit a new high 10 days ago closed higher on Thursday than they did 10 days earlier.  There were 374 new highs on Wednesday and 291 on Thursday.   44% of the stocks in my universe of 4,000 stocks are now in a short term uptrend.  This is up from 33% when the down trend began on 12/20.  71% of stocks are now above their 10 week averages.  55% of the Nasdaq 100 stocks advanced on Thursday, along with  45% of the S&P 500 stocks and 53% of the Dow 30 stocks.  58% of the Nasdaq 100 stocks closed above their 30 day averages, as did 78% of the 211 stocks that have doubled in the past year.  20% of the doublers hit a new high on Thursday.  Six times as many stocks are within 5% of a new high than a new low (30% vs. 5%). Thursday was day one of the new QQQQ up trend (U-1).

Please send your comments to:  silentknight@wishingwealthblog.com.

GMI rises to +4; QQQQ at critical point

The GMI rose to +4 while the underlying market indicators strengthened.  Gmi0103 There were 251 new highs in my universe of 4,000 stocks and 56% of the 172 stocks that hit a new high 10 days ago closed higher Tuesday than they closed 10 days earlier.  31% of stocks are now in a short term up trend, up from 28%, and 71% of the yearly doublers closed above their 30 day averages.  The leading stocks were strong yesterday.  65% of stocks closed above their 10 week averages. The QQQQ is sitting just below its 30 day average.  We will need a few more days to determine whether a new up trend has begun.  Tuesday was the ninth day (D-9) of the current QQQQ down trend.

Please send your comments to:  silentknight@wishingwealthblog.com.

Happy New Year–What if?; GMI: +2; Trade with the trend

                                                                  What If?

What if……………

…no one can predict the stock market;

…high paid pundits only predict the past;

…Cramer is a modern day Elmer Gantry;

…the stock market is a big casino,  a la Nicolas Darvas;

…to survive, analysts and brokers promote an illusion of order and complexity;

…psychology matters more than fundamentals and facts.

Then we might isolate ourselves from outside opinions, use our charts to maximize the chances of a gain, place our bets, and quickly and ruthlessly cut our losses.  In harmony with the trend and with thoughtful trial and error, each small loss brings us closer to the next big gain………….

The GMI closed out the year with a +2.  A short term down trend is in effect, while the longer term up trend remains intact.  However, as we shall see below, the WPM shows some signs of weakening in the longer term trend of the component stocks of the five indexes I follow. One of the things that worries me is that the percentage of investment newsletters that are bullish is at 60.4%, with only 20.8% bearish.  This is a contrary indicator–market peaks tend to be formed when most advisers are bullish. 

There were only 56 new highs on Friday, and 45 new lows, in my universe of 4,000 stocks.  Gmi1230 Only 39% of the 125 stocks that hit a new high ten days earlier closed higher on Friday than they did ten days before.  21% of the Nasdaq 100 stocks advanced, along with only 17% of the S&P 500 stocks and 7% (2) of the Dow 30 stocks.  The QQQQ has now closed below its 10 week average for the first time in nine weeks.  Only 56% of the stocks in my universe closed above their 10 week averages and a mere 28% are in a short term up trend. Just 3% of the 176 stocks that have doubled in the past 250 days hit a new high on Friday; the leaders have stalled.  20% of stocks remain within 5% of a new high.  Friday was the eighth day (D-8) in the QQQQ down trend. Since this down trend was identified on 12/20, the QQQQ has fallen 1.3% and only 40% of its component stocks closed higher on Friday since 12/20.  With 60% of the Nasdaq 100 stocks declining during this period, why not be short or in cash, and go with the trend.  So many of us lose money by staying long when the trend is down.  The pundits scare us into believing the myth that we will miss the train when the turn suddenly comes.  However, when a meaningful turn comes, there are many weeks and sometimes months during which we can hitch a ride.

The WPM showed marked deterioration in all five indexes.  Wpm1230 All indexes closed below their 30 day averages and are in short term down trends.  Only 24% of the Nasdaq 100 stocks closed above their 30 day averages, along with 33-41% of the components of the other indexes.  While all five indexes closed above their 30 week averages, only a reduced 52-64% of their component stocks did.  Time will tell whether this longer term weakening will develop into a longer term down trend.

So we begin the new year in the midst of a confirmed short term down trend.  For me, this is a time to be short or in cash.  Can this trend reverse quickly?  Of course.    If the market turns up, I can turn on a dime, or dollar, along with the GMI.  The key to conservation of capital is not to fight the current market down trend, especially in view of the strong bullish sentiment found among advisers.  As always, the new year will bring tremendous opportunities for profiting on the bull and/or bear side, as long as I trade in harmony with the market trend and cut my losses quickly.

Please send your comments to:  silentknight@wishingwealthblog.com.