A small group (about 7) attended the IBD Meetup tonight. Attendance usually falls off when people become disillusioned with a declining market. What was surprising to me was that although most attendees were confused by or hurting from the current market environment, no one (except me) was considering selling stocks short. While a few were mainly in cash, all were actively trying to find stocks to buy. This sentiment suggests to me that the market has further to fall. When everyone wants to short stocks, I will be looking for a bottom……………….
Surprisingly, the GMI actually increased one point as of Wednesday’s close. This is because there were 123 new yearly highs. On the other hand, the percentage of stocks closing above their 10 week averages fell below 50%, to 47%. This is the lowest percentage since I began tabulating it on June 16. More ominous, all three ETF indexes (DIA, QQQQ and SPY) closed below their 50 day averages, and all on increased volume…………….
I did find one possible ray of hope. I am not sure what it means, but all of my interest rate indicators (short and long term) are suggesting some moderation in longer term interest rates. For example, TLT, which tracks 20+ year treasuries, has broken above its 30 day average and the 10 day has actually crossed above the 30 day average. Rising prices here indicate lower interest rates. (Similar patterns can be found for IRF and SHY). Is this simply a retreat to the safety of U.S. securities or does it represent some moderation in the pressures for future rate hikes?…………………………
Regardless, I am now almost 100% in cash in my IRA. This market is too treacherous and enigmatic for me to trade.
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