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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GMI: +3; Little change in technicals

The GMI rose to +3 on Wednesday because there were 101 new highs in my universe of 4,000 stocks. Gmi1026  There were also 100 new lows, demonstrating how ambivalent this market is.  32% of the Nasdaq 100 stocks, 35% of the S&P 500 stocks and 47% of the Dow 30 stocks advanced Wednesday.  21% of stocks are now in a short term up-trend, up from 8% on October 18.  One third of stocks are now above their 10 week averages, up from 21% on October 13.  Nine of the 14 stocks that hit a new high 10 days ago closed higher than they closed 10 days earlier.  While this represents 64% successful 10 day new highs, the numbers are so small that I kept this indicator negative.  Nevertheless, it suggests that buying new highs ten days ago had a better than even chance of proving profitable. Wednesday was the third day (U-3) in the QQQQ up-trend.

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GMI: +2; Retracement; Some strong stocks

The GMI declined to +2 on Tuesday.  This is because there were just fewer than 100 new highs (97) and there were not enough (just 16) successful 10 day new highs–stocks that hit a 52 week high 10 days ago and closed higher on Tuesday than they did 10 days earlier. 42% of the Nasdaq 100 stocks advanced on Tuesday, compared with 34% of the S&P 500 stocks and 50% of the Dow 30 stocks. This retracement was to be expected, given the preponderance of gainers on Monday.  Gmi1025_1 The GMI reflects strength in the QQQQ, which is in the second day of its new up-trend (U-2).  The percentage of stocks in my universe of 4,000 that closed above their 10 week averages declined two, but the percentage in a short term up-trend increased by four.  The percentage of stocks that have doubled in the past year and are above their 30 day averages declined two percentage points.  About an equal percentage of stocks (12%/13%) are within 5% of their yearly high or yearly low.

I remain cautiously bullish as long as the QQQQ remains above its 30 day average.  There are plenty of interesting stocks flexing their muscles.  Check out:  NTRI, IRIS, KNDL, TIE, ADSK, NDAQ, AAPL, VIVO.  These are not recommendations, only a starting point for research and study.

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