GMI: 0; GMI-S: 25; Bounce or turn?

The GMI remains at zero, although just about all stocks advanced on Thursday– 97% of the Nasdaq 100 stocks, 96% of the S&P 500 and 100% of the Dow 30 stocks.  The GMI-S rose to +25 solely because the indexes closed above their 10 day averages. Still the market has a long way to go to turn the GMI positive.  Gmi0615 There were 12 new highs and 50 new lows in my universe of nearly 4,000 stocks.  Only 27% of the Nasdaq 100 stocks closed above their 30 day averages, and 22% are above their 10 week averages.  Only 36% of stocks are in a bullish up-trend.  Thursday was the 25th day of the QQQQ down-trend.

The IBD 100 stocks as of 5/15 had another strong day.  Ibd0615 96% of the IBD 100 advanced, compared with 90% of my universe of stocks.  And 96% of the IBD 100 closed higher than they opened.  70% of the IBD 100 are now in a bullish up-trend.  The two IBD 100 stocks to hit a new high Thursday were GYMB and XPRSA.  Most of the strength came with regard to the short term averages.  Thus, 37% of the IBD 100 stocks are now above their average close for the past 10 days (10 day average).  However, only 9% are above their average closes for the past 30 days, a key measure of strength.  Just 9% of the IBD 100 list on 5/15 closed Thursday above their close on 5/15.

Only time will tell whether this rush to buy is more than a brief bounce from the string of down days.  Most bottoms take time to form, with at least one re-test of the lows.  I only know a turn after a new trend is established. For now, the trend remains down.

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

GMI: 0; IBD 100 stocks bounce most

The GMI remains at zero.  Gmi0614 For the first time since June 1, the majority of stocks in all three indexes advanced–  63% of the Nasdaq 100 stocks, 61% of the S&P 500 and 83% of the Dow 30 stocks.  There were still only 4 new highs and 245 new lows in my universe of nearly 4,000 stocks.  Only 13% of stocks are in a short term up-trend, and only 14% closed above their 10 week averages. Wednesday was the 24th day in the current QQQQ down-trend.

The comparison of my universe of stocks and the IBD 100 shows a striking difference in performance on Wednesday.  The IBD 100 stocks have been underperforming for weeks.  On Wednesday, however, Ibd0614 85% of the IBD 100 stocks advanced, compared with 57% of the stocks in my universe.  86% of the IBD 100 stocks closed above their opening price……

Usually after a severe down-trend, people are more comfortable wading into the conservative blue chip stocks;  83% of the Dow 30 stocks rose on Wednesday.  The fact that most of the very oversold IBD 100 stocks also rose suggests to me that this rise may only be a dead cat bounce.  The technical damage to the markets has been extensive and the markets would have to rise a lot more before the down-trends would be reversed.  Time will tell if that will happen.  Until then, I trade consistent with a continuing market down-trend.

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

GMI: 0; Down-trend continues; All stocks are bad, but

Not much new on Tuesday.  The GMI is at zero.  More stocks advanced than on Monday; 35% of the Nasdaq 100, 22% of the S&P 500 and 23% of the Dow 30 stocks.  Only 9%of the Nasdaq 100 stocks are now above their 30 day averages.  Gmi0613 There were only 13 new highs and 292 new lows in my universe of nearly 4,000 stocks.  The QQQQ is now in its 23rd day of a decline.  My stats are now around the levels last seen in October, 2005, when that decline was ending.  It remains to be seen whether we are near a bottom or at the beginning of a major decline.

The IBD 100 stocks again fared worse than my universe of stocks.  Ibd0613_1 5% of the IBD 100 stock posted on 5/15 rose on Tuesday, compared with 17% of my stock universe.  However, one bright spot was that 16% of the IBD 100 stocks and 23% of my universe of stocks closed higher than they opened the day.  There were almost no new highs in both groups of stocks.  Three times as many stocks in my universe are within 5% of a new low than a new high (20% vs. 6%).  Only 15% of the stocks in my universe closed above their 10 week averages, a new low since I began recording this statistic in 2005.  Almost all of the IBD 100 stocks closed below their 10 day, 30 day and 10 week averages.  Still, twice as many IBD 100 stocks remain in a bullish stage 2 up-trend (53% vs 26%).

I remain in cash and/or holding puts on some weak stocks.  The Dow could rally some 240 points before I would consider that a new up-trend had begin.  The markets remain in a confirmed down-trend.  By now, everyone should see through the widely proclaimed conventional nonsense that stocks have intrinsic value.  Stocks are only worth what someone else will pay for them.  And each person’s assessment is driven more by mob psychology and greed and fear, than by rational logic.  How else can you explain why a stock like GS can release great earnings and be punished like it was on Tuesday.  In a down-trend, all events are seen through a dark glass that is perceived to be half empty.  Everyone sells quickly because they think that the next guy will sell. As William O’Neil says, all stocks are bad unless they are going up.  But I say that "bad" stocks can make a trader a lot of money if s/he shorts them correctly. (My TC2005 scan of the market found 232 Submarines and only 2 Rocket stocks on Tuesday evening.)

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

GMI: 0; Tech and growth stocks decimated

The GMI remains at zero, as the market down-trend continued.  Only 9-11%of the stocks in the Nasdaq 100, S&P 500 and Dow 30 indexes rose on Monday.  Gmi0612 Only 9% of the Nasdaq 100 stocks closed above their 30 day averages, the lowest number ever, since I began counting this indicator last June.  There were 16 new highs and 157 new lows in my universe of nearly 4,000 stocks.  Monday was the 22nd day of the QQQQ down-trend.  This is the type of market that traders dream of shorting…..

Meanwhile, the IBD 100 growth stocks continue to be slaughtered.  Not a single one of the IBD 100 stocks posted to the list on 5/15 advanced on Monday.  Ibd0612 Almost all of these stocks closed below their 10 day, 30 day and 10 week averages.  Only 6 of these 100 stocks posted on the list on 5/15 closed higher on Monday than they closed on 5/15.  This means that the best and brightest growth stocks with great fundamentals are being sold off to persons looking for "bargains."  The great trader, Jesse Livermore, used to say that it was amazing how much stock could be distributed to the public on the way down.  Severe down-trends typically end when the public loses its appetite for low priced bargain stocks, way down from their highs.  When I go long, I want to buy stocks heading to the moon, not fizzling rockets falling back towards the earth.  Even the great HANS and AAPL are starting to show signs of a down-trend.  According to the TC2005 scan of my stock universe, there are only 5 possible Rockets and 205 Submarines.  It will take more than a sharp rebound to convince me to abandon my shorts and to buy stocks again.

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

GMI: 0; 185 Submarines, 8 Rockets; Brainwashed against shorting

The GMI is back at zero.  All six indicators in the GMI are negative.  In fact, I have found that I cannot profitably trade growth stocks when the IBD Mutual Fund Index is below its 50 day average.  But now the index is below its 200 day average, a clear sign that the best growth mutual fund managers cannot  trade this market profitably.  Gmi0609 The QQQQ has closed below its 10 week average for five weeks.  On Friday, only 27-37% of the stocks in the Nasdaq 100, S&P 500 and the Dow 30 indexes advanced.  There were 32 new highs and 38 new lows in my universe of almost 4,000 stocks.  Only 15% of the Nasdaq 100 stocks closed above their 30 day averages, and only 24% of the stocks in my universe closed above their 10 week averages.  Friday was the 21st day in the QQQQ down-trend (D-21).  The GMI-S is zero, and the GMI-L is now at 19.  The low readings in the longer term moving averages tracked by the GMI-L imply significant market weakness that could persist for quite a while.

The IBD 100 stocks continue to weaken and underperform the general market, as measured by my universe of stocks.  Only Ibd0609 32% of the IBD 100 stocks as of 5/15 advanced on Friday, compared with 37% of my universe.  Stocks in my universe were much more likely to have closed above their 10 day (27% vs 5%), 30 day (24% vs. 9%) and 10 week averages (26% vs. 19%).  The IBD 100 stocks were still stronger with regard to the 30 week averages (68% vs. 40%), indicating that the greater short term weakness in the IBD 100 stocks has not yet nullified their superior strength in the longer term trend.  This relationship is clearly shown in the new statistic in the table, Bullish Stage 2 trend (see Weinstein book at right for a discussion of Stage analysis).  68% of the IBD 100 stocks remain in a bullish Stage 2 up-trend, compared with 38% of my universe of stocks.  It remains to be seen whether the IBD 100 long term up-trend will be overcome by their weak short term trends. Only 12% of the IBD 100 stocks posted on the list on 5/15, closed higher on Friday than they closed on 5/15.  Anyone who thought that the IBD 100 stocks were good "buy and hold" candidates have been taught a costly lesson.

I have been 100% cash in my pension for several weeks now.  I have told you before that I am a chicken and that I go to cash at the first sign of market weakness.  In this way, I have avoided all significant market declines since 1995, but have not missed out on the subsequent rises.  In a market like the current one, it makes no sense to be invested on the long side or to try to find the few stocks that might resist the down-trend.  I go to cash and/or try to short some of the many stocks that are declining.  In spite of the myths spread by the market pundits, there is plenty of time to jump back on board once the market has confirmed a new up-trend.

My current scan of my universe of 4,000 stocks using TC2005 yields 185 Submarines and just 8 Rocket stocks.  There are clearly plenty of stocks in a down-trend that offer good odds of being profitable shorts.  Too bad that we have all been brainwashed into thinking that shorting stocks is too risky.  It is much more risky to buy stocks in a market down-trend.

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