GMI: +3; Back this weekend.

To my visitors: I am only one trader, not a guru, and not a financial advisor.  I am presenting my own opinions and my own experiences and people are welcome to decide for themselves what, if anything, on this site is of value to them.  Please refer to the additional comments, highlighted in red, at the end of this post.

The GMI rebounded to +3 today.  Gmi627 There were 103 successful 10 day highs and 101 new highs today.  Today was the second day of the decline (D-2).  The percentage of stocks that closed above their 10 week average declined to 68%.  All QQQQ and SPY indicators are negative.

I remain mostly in cash and am looking for possible shorts.  There is a story that when one of the Rothschild’s was asked why he was so successful, he replied that he always sold too soon.  I clearly sold GOOG too soon.  I sold not because of any technical weakness in GOOG, but because my market indicators turned down.  I don’t want to own any stocks when my general market indicators are weak.

I also went to cash because I will be away from the market and my computer for a few days.  It will be nice to take a few days off.  I will post again this weekend and wish you all a successful trading week.  It will be nice to have Alan G. and this quarter behind us.

Send your feedback and questions to: silentknight@wishingwealthblog.com.

Please remember that the stock market is a risky place, especially now.  I am not providing recommendations for you to follow.  My goal is to share tools and methods that I have used over the past 40 years of trading, so that you may learn from them and adapt them to your trading style and needs.  While I do my best, I do not guarantee the accuracy of any statistics computed or any resources linked to my blog.  Please consult with your financial adviser and a mental health practitioner before you enter the stock market,  and please do not take unaffordable risks in the current market environment.  See the About section for more statements designed to protect you (and me) as you navigate this market. Past performance does not guarantee future results, but I would rather learn from a former winner than a loser.

Can Cramer hedge? GMI sinks to +1; Content to remain in cash

To my visitors: I am only one trader, not a guru, and not a financial advisor.  I am presenting my own opinions and my own experiences and people are welcome to decide for themselves what, if anything, on this site is of value to them.  Please refer to the additional comments, highlighted in red, at the end of this post.

We should have known that when Cramer finally jumped on the tech bandwagon it probably was topping out.  He is brave to make such explicit predictions.  But I think he is therein sowing the seeds of his show’s  destruction.  No one knows what will happen in the market.  So, by definition, a brave pundit must be proved wrong eventually–to join the long ranks of the fallen gurus, including Gazarelli, Joseph-Cohen and Granville, etc……………..I know Cramer has retired his hedge fund, but it looks like he has forgotten how to hedge………………..

I went to 95% cash in my IRA and 100% money market funds in my university pension.  While GOOG was strong, I sold that too.  Did you ever notice the strange phenomenon that a popular stock like GOOG can often resist a general market decline and then decline when the market strengthens? You begin to think, boy, if this stock can stay strong in a weak market it really should rise when the market moves up!  Then it declines.  Maybe traders rotate into the rebounding "bargain" stocks.

Because I trade in tax deferred accounts, I do not care if I get out too soon, or at the wrong time.  I merely buy back when I think the trend is clear again and the odds favor a rise–no tax consequences.  Being out of the market provides a mental catharsis and is good for the psyche and the bottom line. I can step back and be amused by all of the conflicting pontifications of the media analysts.  Explaining the market action after it has occurred  reminds me of that famous definition of history–"games people play on the dead."  Show me a person who can explain the market action BEFORE it happens.  Now, there is a perspicacious pundit worth listening to……………………………..

The GMI sank to +1 Friday.  Gmi624_1 There were only 89 successful 10 day new highs (new high 10 days ago that closed higher Friday than 10 days earlier, see post on 4/26).  There were only 94 new highs (and 45 new lows) Friday in my universe of 4,000 stocks.  The daily and weekly QQQQ indexes turned negative.  The SPY daily index needs one more day to turn negative. Only the IBD growth mutual fund index remains positive, but is declining towards its 50 day average. The percentage of stocks closing above their 10 week average declined to 70%.

As I see it, we are in day one of the decline (D-1).  However, turning points can be tricky and it is easy to get whipsawed.  If we get to D-4 next week I will begin to look for stocks or indexes that I can buy puts on.  Right now I am content to remain in cash.  The market’s true proclivities will be revealed after the end of the month/quarter and after we know if Alan is done being Fed up with the market (interest rate market, that is).

Send your feedback and questions to: silentknight@wishingwealthblog.com.

Please remember that the stock market is a risky place, especially now.  I am not providing recommendations for you to follow.  My goal is to share tools and methods that I have used over the past 40 years of trading, so that you may learn from them and adapt them to your trading style and needs.  While I do my best, I do not guarantee the accuracy of any statistics computed or any resources linked to my blog.  Please consult with your financial adviser and a mental health practitioner before you enter the stock market,  and please do not take unaffordable risks in the current market environment.  See the About section for more statements designed to protect you (and me) as you navigate this market. Past performance does not guarantee future results, but I would rather learn from a former winner than a loser.

GMI falls to +3; Getting defensive-raising stops

To my visitors: I am only one trader, not a guru, and not a financial advisor.  I am presenting my own opinions and my own experiences and people are welcome to decide for themselves what, if anything, on this site is of value to them.  Please refer to the additional comments, highlighted in red, at the end of this post.

While I want to believe that today was a one day decline that will rectify itself in the coming days, I am not so sure.  Gmi623 The GMI has fallen to +3.  The daily and weekly QQQQ indexes will turn negative if the index does not rebound tomorrow.  Only 17% of the Nasdaq 100 stocks rose today, along with 21% of the S&P 500 stocks and only 7% of the Dow 30 stocks.  The percentage of the stocks in my universe of 4,000 that closed above their 10 week average also declined, from 80% to 73%.  The QQQQ declined today on the biggest volume since its decline on April 20, before the current rally began. We are now in the 34th day of the rally (U-34).

It is possible we could still get the end of the month/quarter rally I have been anticipating and hanging on for.  However, I do not trust the market now.  I was stopped out of NDAQ and BOOM today.  I am moving all of my stops up close to today’s lows.  I think the odds of having successful longs is decreasing.  I have told you that I am a chicken.  I would rather be sold out even if I am wrong, preserve my capital, and live to trade another day.  When my QQQQ daily index definitely turns negative, I go to 100% cash.

In addition to having concerns about how $60 oil will affect theIrx623  consumer and inflation, I am concerned that the short term interest rate indicator climbed to a new high today. (Click on chart to enlarge.) Speculators are clearly betting on higher short term rates.

I’m sorry to bring such depressing news tonight.  Please don’t shoot the messenger. Let’s hope the QQQQ rallys tomorow.

Send your feedback and questions to: silentknight@wishingwealthblog.com.

Please remember that the stock market is a risky place, especially now.  I am not providing recommendations for you to follow.  My goal is to share tools and methods that I have used over the past 40 years of trading, so that you may learn from them and adapt them to your trading style and needs.  While I do my best, I do not guarantee the accuracy of any statistics computed or any resources linked to my blog.  Please consult with your financial adviser and a mental health practitioner before you enter the stock market,  and please do not take unaffordable risks in the current market environment.  See the About section for more statements designed to protect you (and me) as you navigate this market. Past performance does not guarantee future results, but I would rather learn from a former winner than a loser.

Cramer discovers techs–finally! IBD MeetUp; GMI: +5: Catching HANS

To my visitors: I am only one trader, not a guru, and not a financial advisor.  I am presenting my own opinions and my own experiences and people are welcome to decide for themselves what, if anything, on this site is of value to them.  Please refer to the additional comments, highlighted in red, at the end of this post.

Cramer finally discovered tech stocks today—33 days into the rally.  However, he endorsed CSCO and MSFT, two long time losers.  While CSCO has a promising chart, MSFT does not.  It is clear to me that Cramer is not a believer in charts–he attempts to discern the mythical value of stocks. Better he should stick to entertainment and not make predictions…………………………………………..

Tonight was IBD Meetup night.  Unfortunately, it conflicted with my son’s basketball game.  So I missed the first hour. What a difference a rally makes!  There were about a dozen people there, all discussing the market and their holdings.  Most members had not wanted to attend last month’s meeting.  Some people had made money the past month, and some were still timid about owning stocks.  I asked people about GOOG–most were afraid of it–a good sign.  I did not find people to be overly bullish about the market but most were looking for stocks to buy.  COH, BBBY, and BBY were discussed while I was there.  Given the attendees’ ambivalence, this rally may have a ways to go………………………………

The GMI dropped one to +5, because there were only 99 successful 10 day highs today.  Gmi622 (Click on chart to enlarge.) Part of the reason for the drop in number was that there were only 136 new highs 10 days ago.  The other components remained strong.  There were 184 new highs today and only 17 new lows.  While 45% of the Nasdaq 100 stocks rose, 52% of the S&P 500 stocks and 47% of the Dow 30 stocks rose.  We are in the 33rd day of the rally (U-33) and the percentage of stocks in my universe of 4,000 stocks that closed above their 10 week average climbed back to 80%. ………………………………………

In response to last night’s post, a reader asked me how I could have detected the rise in HANS early on.  The purpose of my example was to show that one does not have to catch a rocket early on to profit.  Anytime one discovered that HANS was a rocket, it could have been purchased for a profit.  One does not need to catch a rocket as it leaves the launch pad.  There is plenty of time to hitch a ride, as a true rocket travels for months on its journey to the moon……………………………….

Send your feedback and questions to: silentknight@wishingwealthblog.com.

Please remember that the stock market is a risky place, especially now.  I am not providing recommendations for you to follow.  My goal is to share tools and methods that I have used over the past 40 years of trading, so that you may learn from them and adapt them to your trading style and needs.  While I do my best, I do not guarantee the accuracy of any statistics computed or any resources linked to my blog.  Please consult with your financial adviser and a mental health practitioner before you enter the stock market,  and please do not take unaffordable risks in the current market environment.  See the About section for more statements designed to protect you (and me) as you navigate this market. Past performance does not guarantee future results, but I would rather learn from a former winner than a loser.

GMI: +6; HANS-rocket prototype; IBD Meetup tomorrow night

It was another positive day, with 213 successful 10 day new highs, the most in weeks. (See archive post on 4/26 for indicator definitions.)   Buying stocks at new highs has been profitable.   In fact, the median increase in the 213 stocks that hit a new high 10 days ago and rose is 3%, with 24% of them increasing 4% or more and the top 11 rising 9-23%.   The largest gainer was SWN, up 23% in the past 10 days, followed by CNQ, up 18%, both energy stocks.Gmi621 The GMI remains at +6.   There were 168 new highs today (in my universe of almost 4,000 stocks) and only 15 new lows.   The Nasdaq 100 did better today than yesterday with 44% of its stocks rising, compared to 40% of the S&P 500 and 33% of the Dow 30 stocks. This is day 32 of the up trend (U-32).   The percentage of stocks closing above their 10 week average declined 2 points, to 78%…………………………………

Check out HANS, one of the most consistent risers of this market. Hans2 (Click on weekly chart to enlarge.)    It broke to a new high today.   Note that HANS has not closed below its rising 10 week average (dotted line) since October 2004.   This is the prototype of a rocket and you might want to compare all of your potential purchases to this chart.   A shrewd investor could have bought HANS anytime since October, 2004, placed a stop below its 10 week average, moved it up as it rose, and never lost any sleep over the stock.   He didn’t have to wait for a base to form or for a bounce.   In my opinion, this is the sanest way to trade.   Too simple?   Check it out on the runs of past winners (for example TASR, 6/03-4/04)…………………………………………..

Tomorrow night is the IBD Meetup group meeting. It will be interesting to see if the members have rebounded.   Last month’s meeting, you will remember, consisted of only 3 persons and the low turnout was a wonderful contrary indicator.   When traders won’t even meet to talk about the market, a rally is imminent.