GMI: +1; Indicators strengthen; Still mainly in cash

The GMI rose to +1 because 58% of the stocks that hit a new high 10 days ago closed higher on Thursday than they did 10 days before.  For the first time in a while, buying new highs was likely to have been profitable. The other 5 indicators remain negative.  Gmi0601 The short term GMI-S rose to +25.  It is too soon to tell whether this  bounce will become a major up-trend.  88-92% of the stocks in the Nasdaq 100, S&P 500 and the Dow 30 rose on Thursday.  There were 81 new highs and 26 new lows in my stock universe. 16% of the stocks in my universe of 4,000 are within 5% of a new high, and only 9% are that close to a new low.Thursday was the fifteenth day (D-15) in the current QQQQ short term down-trend……..

The IBD 100 growth stocks did quite well on Thursday.  Ibd0601_184% rose and 85% closed higher then they opened.  81% closed above their 10 day averages.  Still only 8% hit a new high and only 40% of stocks are above their key 30 day average and only 12% are in a short term-up trend.  29% bounced above their 10 week average–a sign of possible support.  The longer term trend looks better for the IBD 100 stocks, with 89% closing above their 30 week averages…….

I am nibbling at  1-2 break-out stocks but with the GMI at +1, I remain mostly in cash and in a few puts.  Failure of this rally could lead to a significant decline.

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

GMI:0; Staying defensive; 3 interesting new highs

The GMI remains at zero and there is no reason to change from a defensive posture.  78% of the Nasdaq 100 stocks advanced on Wednesday, along with 84% of the S&P 500 stocks and 90% of the Dow 30 stocks.  There were still more new lows than new highs (66/41) in my universe of 4,000 stocks.  Gmi0531 Wednesday was the fourteenth day (D-14) in the QQQQ short term down-trend.

23% of the Nasdaq 100 stocks closed above their 30 day averages, up from a low of 11% on 5/23.  28% are now above their 10 week averages, up from a low of 21% on 5/23.  12% of the Nasdaq 100 stocks are in a short term up- trend, up from a low of 6% on 5/24.  So, although the indicators remain very negative, they have moved up from their recent lows.  Ibd0531_1

The IBD 100 growth stocks performed much like my universe of stocks. 75-79% of both groups of stocks advanced on Wednesday and 68-70% closed higher then their opening prices.  However, only 26% of my universe of stocks closed above their 30 day averages, as did 30% of the IBD 100 stocks.  Only 10-12% of both groups are in a short term up-trend.  The longer term trends are still stronger for the IBD 100 growth stocks than for my general universe of stocks; many more IBD 100 stocks closed above their 10 and 30 week averages.

I remain mainly in cash and holding some puts.  I like corrections, however, because it is easier to find the next set of leaders.  The next leaders tend to be among the first to hit new highs.  Today, there were 41 new highs.  Among them were three  stocks that had triple digit earnings gains in the most recent quarter:  GLBL, IFO and WHQ.  These stocks may be worth watching when the market turns……………..

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

GMI: 0; GMI-L falls to 50; In cash and puts

The GMI remains at zero and now my longer term indicators are declining.  Weakness in the IJR and SPY indicators reduced the GMI-L to 50; only one half of my longer term indicators remain positive.  Gmi0530_1 On Tuesday, none of the Dow 30 stocks advanced, but 9% of the S&P 500 stocks did along with 10% of the Nasdaq 100 stocks.  My universe of 4,000 stocks and the IBD 100 stocks each did a little better, with 14% gaining.  There were 8/22 successful 10 day new highs but 73/116 successful 10 day new lows.  Shorting and holding new lows 10 days ago was much more likely to be profitable than buying and holding new highs.  There were 34  new highs and 60 new lows on Tuesday.  Tuesday was the thirteenth day (D-13) in the current short term down trend in the QQQQ.  Ibd0530_1

Almost all my indicators for my universe of stocks and the IBD 100 stocks declined.  However, stocks in a short term up trend increased 1-2% for each set of stocks. ….

I remain in cash or in puts in my IRA.  I go with the trend and only reverse after the trend has.  In a short time we should probably understand what economic events the market has been anticipating. 

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

GMI: 0; IBD 100 stocks stronger; Some shorts; Ocean City had light traffic;

The GMI remains at zero, in spite of the strength last week.  On Friday, 63% of the Nasdaq 100 stocks rose, as did 73% of the S&P 500 stocks and 87% of the Dow 30 stocks.  Gmi0526_2 However, there were only 28%  (8/29)successful 10 day new highs–stocks that hit a new high 10 days ago and closed higher on Friday than they did 10 days before.  In addition, there were only 64 new yearly highs in my universe of 4,000 stocks.  None of my 16 short term indicators for the SPY, DIA, QQQQ and IJR were positive–GMI-S= 0, and the GMI-L = 63.  Friday was the 12th day of the current short term down trend in the QQQQ.

I expanded the comparison of my indicators to include the IBD 100 stocks.  Ibd0526 I think it will provide valuable insights into the market to see how the highly rated IBD100 stocks’ performance compares with my universe of 4,000 stocks.  On Friday, 68% of the stocks in my universe advanced, compared with 79% of the IBD 100 stocks.  About the same percentages of stocks closed above their short term 10 day and 30 day averages.  8%-11% were in a short term up trend. Major differences appeared in the longer term indicators, however.  Thus, 31% of my universe of stocks closed above their 10 week averages while 51% of the IBD 100 stocks did.  90% of the IBD 100 stocks closed above their 30 week averages, but only 52% of my universe of stocks did.  Finally, twice as many IBD 100 stocks bounced above their 10 week averages last week (29% vs. 13%).  These differences are important and signify that the IBD 100 type of growth stocks are more likely to remain in longer term up trends and almost one third found support last week at their 10 week averages.  As long as these stocks hold above their 10 and 30 week averages, growth stocks remain in longer term up trends…….

While the markets have bounced and many growth stocks are holding up, there have been many declines in other stocks.  I scanned the market for stocks that appear to be breaking down. If the market continues to weaken this week, I will research buying puts on the following stocks:  RECN, PSUN, KOSP, RTSX, OXM, NMTI, WBSN and CMX.  All of these have had some high volume down weeks since reaching peaks several months ago. All are below their 10 week averages and their declining 10 week averages are below their 30 week averages…

I asked some friends about what it was like this weekend in Ocean City, on Maryland’s eastern shore.  The place should have been inundated with tourists–it was not.  I also talked with a real estate agent there who said there was a huge inventory of houses and condos that were not selling.  If other hot vacation markets are as weak, we may be seeing the effects of high gas prices and high interest rates.  Maybe the Fed will decide to pause as these trends become evident………

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

GMI: 0; IBD 100 stocks shine; Waiting for confirmation of up-trend

Well, we finally got the long awaited bounce.  While the GMI remains at zero, some of my indicators strengthened Thursday.  Gmi0525 A lot of stocks advanced– 74% of the Nasdaq 100 stocks rose, along with 82% of the S&P 500 stocks and 90% of the Dow 30 stocks.  The last time we had percentages like this was January 3.  The interesting thing is that 95% of the IBD 100 stocks (as of 5/15) advanced.  IBD 100 stocks had been among those most battered during this decline. It is therefore noteworthy that people bought the growth stocks yesterday.  We will continue to monitor the IBD 100 stocks for a resurgence of growth stocks, but with the IBD growth mutual fund Index below its 50 day average, I am not ready to buy these stocks.  When these super managers can’t make money in growth stocks, neither can I.

In spite of this strength Thursday, there were only 36 new highs and 30 new lows in my universe of 4,000 stocks.  My TC2005 scan of the 4,000 stocks yielded 160 "Submarine" stocks but only 10 "Rocket" stocks.  Only 8% of the 4,000 stocks are now in a short term up trend and only 27% closed above their longer term 10 week  averages.  For now, these indicators have bouncedoff of their extreme lows.  Still, only 21% of the Nasdaq 100 stocks closed above their critical 30 day averages and only 12% of stocks are within 5% of a new high.  There were again very few successful 10 day new highs.  Only 9% of the 209 stocks that hit a new high ten days ago closed higher on Thursday than they closed ten days ago.  Buying stocks at new highs has, thus, been a losing proposition.  On the other hand, shorting stocks at new lows 10 days ago would have been profitable in 58% of the cases.  Thursday was the eleventh day (D-11) in the current QQQQ short term down trend. 

Putting this all together, I remain largely in cash, while holding puts on a few stocks in my IRA.  It will take a few more days for me to determine whether this is a dead cat bounce or the beginning of a meaningful up-trend.  I am reluctant to buy more puts now.  This is because the put/call ratios and letters from readers suggest a lot of retail interest in put options.  When that happens we usually get at least a bounce–the market does not usually accommodate the bets of option players.

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