I will become more confident of this new short term down-trend if it can reach day 5. For now, I own some calls on SQQQ and am almost 100% in cash in my margin account. Things are too volatile for me to trade right now. The prior 21 day short term up-trend of the QQQ generated no trading profits. Another day with the GMI below 3 will send a GMI Sell signal. Stay tuned. (I have two types of signals. The first is the QQQ short term trend count. The second is a more significant general market, GMI signal. I take both signals into consideration in timing the market.)
QQQ short term up-trend may end on Thursday
IBD now sees market “up-trend under pressure.” By my count, a flat or down day on Thursday will begin a new short term down-trend in the QQQ. Note that the GMI-2 declined to 1. I posted mid-day on Wednesday to inform readers that I was reducing my long positions in the QQQ even more. I now have a small long position and a larger short position in the QQQ leveraged ETF’s. I am 100% cash in my margin account. The market volatility scares me in the midst of the political brinksmanship in Washington. However, the fiscal cliff mess may actually be a cover for a developing bear market. A rally from a last minute resolution may not last long? The year after a Presidential election sometimes brings a weak market, even without extreme political melodrama.
Going to cash and short in my trading accounts
The QQQ has broken support (see daily chart below). I am going to cash or short. I may be wrong but I would rather conserve cash for the next rally. It would be a major sign of weakness to me if the QQQ closes today below 64.87. If it looks like it will I will close out my remaining TQQQ. Too many of the market darlings I follow have already been wounded, including ISRG, CMG, AZO, PNRA and AAPL. My trading gurus have written that after the leaders fall, the rest of the market eventually follows.
