The GMI held at 6 even though few stocks rose on Friday. There were 203 new highs in my universe of 4,000 stocks and only 13 new lows. 38% of the Nasdaq 100 stocks advanced on Friday, along with 46% of the S&P 500 stocks and 66% of the Dow 30 stocks. The QQQQ has now closed above its 10 week average for 10 weeks and Friday was the 45th day in the current QQQQ up-trend. Since August 16, the QQQQ has risen 8.9%, and 73% of the Nasdaq 100 stocks have advanced; 41% advanced more than 10% and 25% advanced more than 15%. During this same period, the ProShares ETF that attempts to double the performance of the QQQQ (QLD) advanced 16.9%, while the similar “ULTRA” ETF for the S&P 500 index ( SSO) rose 10.9% and the ETF for the Dow 30 index rose 11.7%. Hence, by simply buying the QLD when the GMI signaled a rise and holding on during this rise, one could have received a 17% return–a return that beat 84% of the Nasdaq 100 stocks. By buying the Ultra QQQQ ETF, I can beat 84% of the Nasdaq 100 stocks. Why try to find the few individual stocks that outperform the QQQQ, when I can just ride the Ultra QQQQ ETF? I can’t wait until the the GMI signals a down-trend so that I can switch to the Ultra short QQQQ ETF (QID) and ride the QQQQ back down.
Meanwhile, the IBD 100 stocks have not done very well the past few months. On Friday, 38% of the Nasdaq 100 stocks rose, compared with 23-32% of four recent IBD 100 lists. Only 43% of the stocks on the list from 10/16 closed higher than they closed on the day the list was published. 4% or fewer of the stocks on each list hit a new high on Friday, somewhat better than the Nasdaq 100 stocks (2). 74-82% closed above their average price of the past 30 days. The four stocks on the list from 10/16 that hit a new high were : HCSG, KNOT, AMX and TV. The list from 10/2 included: HCSG, KNOT, AMX and CHL. The list from 8/14 added OKE. The fact that AMX was on all four lists suggests that this stock has had staying power dating back at least to 5/16.
I have been writing about GOOG and AAPL for sometime and have made some money trading them. But I still make mistakes. Last week with only days before expiration I wrote covered calls on AAPL and GOOG because the call options were providing incredibly high time premiums for just a few days, through Friday. I wrote covered calls because I was influenced by some media pundits who said the market had to weaken, and by writing calls I limited my gains on these two stocks. How many times do I need to remember to heed Darvas’ advice to eliminate all outside opinions from my trading. When I just follow the market myself I do much better. The opinions of others tend to destroy my judgment……………..