GMI: +6; End of year rally

The GMI reached the maximum+6 Wednesday.  There were 235 new highs and 45 new lows on Wednesday.  Gmi1102_1 There were only 31 successful 10 day new highs but this represented 62% of the 50 stocks that hit a new high ten days ago.  Given the strength in the rest of the market, I called this index positive.  Almost one half (48%, +11) of the 4,000 stocks in my universe closed above their 10 week averages.  82% of the Nasdaq 100 and S&P 500 stocks advanced on Wednesday, along with 77% of the Dow 30 stocks.  78% of the stocks that have doubled in the past year are now above their 30 day averages, an increase of +13.  The strongest stocks over the past year are recovering faster than the rest of the market.  The strong grow stronger.  Twice as many stocks are now within 5% of their new highs than their new lows (19% vs. 9%).  The end of year rally has begun.

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GMI: +5; Market strengthening; Scan of the market

The GMI rose to +5 Tuesday, indicating the beginning of an up-trend.  Gmi1101_1 There were 138 new highs and only 67 new lows.  The Daily QQQQ and SPY indicators turned positive.  And the IBD growth mutual fund index is now above its 50 day moving average, demonstrating that the pros who invest in growth stocks are doing better.  65% of the stocks that have doubled in the past year closed above their 30 day averages, another indication that the growth stocks are recovering.  Tuesday was the first day in the new QQQQ up-trend (U-1).

So it is now time to look for stocks to buy.  Among the strong stocks that came up in my scan of the market are: BBD, HOLX, RATE, NMTI, ESLR, GOOG, NDAQ, SMTS, THE , BCSI, PRLS, IRIS, TIE. This is a good list to begin to research.  All have doubled in the past year and are near their yearly highs. 

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GMI: +2; 165 yearly highs; D-3

The GMI rose to +2 on Monday.  Gmi1031 There were five times more new highs than lows (165/31) in my universe of 4,000 stocks, a promising sign. 86% of the Nasdaq 100 stocks advanced Monday, along with 80% of the S&P 500 stocks, but only 57% of the Dow 30 stocks.  The daily QQQQ and SPY indicators are too close to call.  An advance today will turn them positive.  A number of my internal indicators improved yesterday.  36% of stocks are now above their 10 week averages  and 25% are in a short term up-trend.  Almost two-thirds (64%) of the 177 stocks that have doubled in the past year are now above their 30 day averages– the strongest stocks are recovering.  And there are more stocks within 5% of their yearly highs than lows (15% vs. 11%). Monday was day three of the current QQQQ downtrend (D-3).

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GMI: +1; Dow stocks stronger

This has been a great market to watch from the sidelines.  The indexes are jumping above and below their key moving averages, signifying the lack of a consistent trend.  Gmi1028 The GMI remains at +1 with only the Weekly QQQQ Index positive.  Very few (71) stocks hit new highs on Friday and there were only 15 successful 10 day new highs.  Nevertheless, there was some improvement in the markets.  The percentage of stocks in my  universe of 4,000 that closed above their 10 week averages climbed 3, to 29%.  And 52% of the stocks that have doubled in the past year closed above their 30 day averages.  Almost as many stocks are within 5% of their yearly highs as their lows (11% vs. 14%).  Friday was the second day in the QQQQ decline (D-2).

The WPM showed some strengthening last week.  Wpm1028 The largest improvement occurred in the Dow 30 stocks.  It is the only index closing above its 30 day average, as did 67% of its component stocks.  The components of the other 4 indexes showed large increases in the percentage of stocks closing above their 30 day averages.  The QQQQ, MDY and IJR all closed above their 30 week averages, indicating some longer term strength.  Almost one half of the stocks in all five indexes closed above their 30 week averages.

The bottom line is that there are some signs of general strengthening, but most indexes’ short term trends are still down.  If the SPY and QQQQ can regain their 30 day indexes, I may be tempted to go long again.

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GMI: +1; Back in reverse; conserve capital

The QQQQ could not hold its 30 day average and the markets are back in a decline.  The GMI fell to +1, with only 46 new highs and few successful 10 day new highs, Thursday. Gmi1027 Only 7% of the Nasdaq 100 stocks, 14% of the S&P 500 and 17% of the Dow 30 stocks advanced on Thursday.  This was the weakest showing since October 5, when the QQQQ began a decline and the GMI registered 1.  The percentage of stocks closing above their 10 week averages fell 7, to 26%.  Only 43% (-17) of this year’s doublers now remain above their 30 day averages.  There were 46 new highs and 199 new lows in my universe of 4,000 stocks. Twice as many stocks are now within 5% of their yearly lows than highs (18% vs. 8%). Thursday was the first day in a new QQQQ decline (D-1).  The next big test is whether the QQQQ can hold the bottom of the last decline, around 37.33.  These are the markets that try traders’ souls.  The key is to conserve capital until the market develops a solid trend to trade.

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