The GMI is still 6, as 50-55% of the stocks in the Nasdaq 100, S&P 500 and Dow 30 indexes advanced on Thursday. There were 327 new yearly highs in my universe of 4,000 stocks. Interestingly, IJR (S&P 600 SmallCap ETF) showed a little strength on Thursday, causing the GMI-S to climb to 63. As you probably know, small cap stocks are said to show strength around January. Thursday was the 73rd day in the current QQQQ up-trend.
The GMI is back to 6. 76% of the Nasdaq 100 stocks rose on Wednesday, along with 82% of the S&P 500 stocks and 83% of the Dow 30 stocks. There were 238 new yearly highs in my universe of 4,000 stocks. Wednesday was the 72nd day of the current QQQQ up-trend. One thing I noticed today in IBD bothers me a lot about this market. The Investors Intelligence poll shows 57.5% of investment advisors bullish and only 22.3% bearish. Such extreme bullishness is typical of markets that are topping out…
The GMI is still 5, but this time because there were only 71 new yearly highs in my universe of 4,000 stocks. 44% of the Nasdaq 100 stocks advanced on Tuesday, along with 54% of the S&P 500 stocks and 63% of the Dow 30 stocks. 63% of the Nasdaq 100 stocks closed above their 30 day averages. Many stocks and market indexes bounced off of the important support levels I monitor. It is very important that they hold these levels tomorrow. Declines below these levels could cause the GMI to turn negative. Tuesday was the 71st day of the current QQQQ up-trend.
The GMI fell one, to 5 and the GMI-S fell to 50, down 50. My short term indicators for all four indexes, especially the DIA, weakened Monday. Still, there were 117 new highs in my universe of 4,000 stocks. But only 6% of the Nasdaq 100 and S&P 500 stocks advanced on Monday, along with 10% of the Dow 30 stocks. The last time we saw single digit advances in these three indexes was last June 5 (6%, 5%, 3%, respectively) , in the early stages of the decline that ended on July 18. Monday was the 70th day in the current QQQQ up-trend, which remains intact.
The IBD 100 stocks have not done much better than the Nasdaq 100 stocks recently. Only 7-14% of the IBD 100 stocks in the five lists that I have been following advanced on Monday, compared with 6% of the Nasdaq 100 stocks. But only 39% of the IBD 100 stocks from 11/20 closed higher than they did on the day the list was published. Still, 80% of those stocks closed above their 30 day averages, better than the 60% of Nasdaq 100 stocks that did so. Note how few stocks in these lists hit new yearly highs on Monday. Growth stocks have stalled for now.
The GMI is still 6 and all of my indicators are positive. Is a New Year’s rally shaping up? But what do Dec 11, 2000, Dec 6, 2001, Dec. 2, 2002, January 20, 2004 and Dec 15, 2004 have in common? They were all peaks in the QQQQ! So before we jump on the New Year’s Rally bandwagon, maybe we should be open to the possibility that a major market top can form in December or January. In fact, January 11, 2006 was a peak in the QQQQ this year (at 43.31) that was not exceeded until a few weeks ago on November 9, after reaching a low of 35.54 on July 18 (an 18% decline from the January peak). A December or January top is therefore far from unlikely, especially in an atmosphere of frenzied bidding up of IPO’s and a growing number of people with stock market profits betting on a New Year’s rally…………
Meanwhile, Friday was a terrible day for the Nasdaq 100, with only 22 of the 100 stocks advancing, the lowest number since November 1. 35% of the S&P 500 stocks rose on Friday along with 23% of the Dow 30 stocks. While only 12% of the Nasdaq 100 stocks rose on November 1, that was two days before the latest push up began. Friday was the 69th day in the current QQQQ up-trend. Stay tuned……..