I hate to tell you this, but the GMI is back to +1. The Daily SPY Index fell back into limbo. This is the most difficult, whipsawing market I have seen in a long time. Tonight, I moved all of my sell stops very close to my stocks’ lows today. I may end up 100% in cash by this weekend.
The Daily QQQQ Index is barely positive. The QQQQ bounced off of its declining 50 day moving average today.(click on chart to enlarge) The fact that this moving average is declining means that each day’s price (the new day added to the average) is less than its price 51 days ago (the oldest day dropped)–not a good sign. But the 2 largest spikes in volume the past 2 weeks are green, meaning they were up days–a good sign. If the QQQQ does not close above its 50 day moving average soon, we are probably going to see a volatile continuation of the down trend.
Note that the 50 day moving average peaked in January and has been declining ever since. Since the January peak through today, 61% of the NASDAQ 100 stocks have declined. The last time we had a consistent rising 50 day average in this index was from September, 2004 until the top in January, 2005. During that rising period 76% of the NASDAQ 100 stocks rose. Maybe we should stay out of the NASDAQ stocks as long as the QQQQ is below its declining moving average. The SPY and DIA are also currently below their 50 day moving averages. I’m talking myself into taking the short side again.
There were 87 new 52 week highs today in my universe of 4,000 stocks and 79 new lows. There were 26 successful 10 day new highs and 93 "successful" 10 day new lows. The bears seem to have the edge in this market. So I am not going to list any strong stocks today; they will only get slammed tomorrow or next week.
So I will show you an ugly chart of FDG that I almost posted last night. (If I had, wouldn’t I look perspicacious tonight.) Note the huge red spikes in down volume. Note the topping out of the moving average. Note the stock trades options. If I were looking for a short, FDG looks ripe to me. Maybe all of the good news is out on FDG. There was no news on FDG today telling us why it fell so much. Remember, the bad news usually shows up in the stock price long before it shows up in the media. Perhaps FDG is getting a lump of coal next Christmas.
It’s not fair to pick on FDG. So many of its cousins also fell today—BOOM, CCJ, NRD, ARS, to name a few. In fact, the metals and mining industry chart shows that the entire group is sinking. I think the institutions are giving these mining stocks the shaft. Sector wide selling bodes well for taking the short side on one of these stocks. Other sectors that were ugly today include silver, copper, metals, steel, aluminum and oil and gas. What is happening to the commodities?
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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.