Cramer

The GMI rose on Wednesday to +1 because 50% of the 23 stocks that hit a new high ten days ago closed higher on Wednesday than they closed ten days earlier. However, with such a small number (14) of successful 10 day highs, this indicator is still weak and could turn negative on Thursday again.  There were 30 new highs and 72 new lows in my universe of 4,000 stocks.  Only 20% of the Nasdaq 100 stocks closed above their 30 day averages.  Between 36-41% of the stocks in the Nasdaq 100, S&P 500 and Dow 30 indexes advanced on Wednesday.  The QQQQ has closed below its 10 week average for the fourth week.  The QQQQ has been in a short term down trend for nineteen (D-19) days………..

Shame on IBD!  On Wednesday, after weeks of claiming that the market was in a rally, IBD wrote that, "Today’s Market Pulse notes that the market is in a downtrend, which has been the case for nearly a month."  IBD is a great newspaper, but they should have the integrity to admit that they have been repeatedly wrong on the market’s recent trend.  However, the GMI and my indicators have been calling the down trend for 19 straight days……………

Perhaps IBD is smarting from the terrible performance of the IBD 100 stocks.  While 38% of my universe of stocks advanced on Wednesday, only 30% of the IBD 100 rose.  More of my universe of stocks closed above their 10 day (32% vs. 16%) and their 30 day averages (26% vs. 18%).  Note that since this IBD 100 list was published on 5/15, only 14% of these stocks have risen.  Thus, 86% of the IBD 100 stocks have declined or gone nowhere, along with the market……

Note also that more of my universe of stocks are within 5% of their yearly lows than highs (14% vs. 11%).  What this adds up to is that the market has been in a significant decline where it has been relatively easy to make money, as long as one stayed with the short trend.  My puts have done nicely during this period (see my post on 5/24 for an example of one of my shorts).  People short change themselves (no pun intended) to only trade on the bull side of the market.  Buying puts in an IRA (or taxable account) is one way to take advantage of the market’s decline while limiting potential losses.  We have all been brainwashed into avoiding the short side of the market.  Shame on Jim Cramer, who used to short the market while running his hedge fund, but refuses to advocate that his CNBC audience short stocks.  He and the other media pundits instead encourage people to try to find those rare stocks that can rise against the trend.  Why not take the easy way and trade the 80%+ of stocks that go with the major market trend…………………….

Please send your comments to:  silentknight@wishingwealthblog.com.

The GMI is back to zero as few stocks rose on Monday.  Only 3-6% of the stocks in the Nasdaq 100, S&P 500 and Dow 30 groups advanced. There were 49 new highs and 75 new lows in my universe of 4,000 stocks.  Only 18% of the Nasdaq 100 stocks closed above their 30 day averages.  Monday was the seventeenth day (D-17) in the current short term down trend in the QQQQ…….. 

The IBD 100 stocks seriously weakened on Monday, as did my universe of stocks.  Only 10% of the stocks in my universe rose, along with 7% of the IBD 100 stocks.  1% of my universe of stocks hit a new high, and 4% of the IBD 100 stocks.  Only 28% of both stock groups closed above their critical 30 day averages.  28% of my universe of stocks closed above their 10 week averages, compared with 39% of the IBD 100 stocks.  Only 20% of the IBD 100 stocks closed higher than they did on 5/15 when they were published on the IBD 100 list. The growth stocks typified by the IBD 100 have become decimated by the current decline……

The GMI has been weak since May 14, when I  went to cash and/or short.  It took me 40 years to learn not to fight declining markets like this.  Only Cramer and mutual fund managers have to stay invested.  For me, it is time to be in cash or short.  I will wait for the GMI to rise to at least +4 before I risk my money on the long side.  It looks like the "go away in May" slogan has some merit again this year.

Please send your comments to:  silentknight@wishingwealthblog.com.

I finally got a copy of IBD and found that the IBD Growth Mutual Fund Index has been below its 50 day average all week.  So the GMI has actually been zero since Monday.  When the growth mutual fund managers cannot make money, neither can I–on the long side.  But I have had hefty short positions in my IRA in the form of puts, for the past 2 weeks.  So Wednesday was a gift.  Only 15% of the Nasdaq 100 stocks rose along with 9% of the S&P 500 stocks and 3% (one) of the Dow 30 stocks.  There were 23 yearly highs in my universe of 4,000 stocks and 134 new lows.  Only 19% of stocks remain in a short term up trend and 28% are in a longer term up trend (above their 10 week averages).  Wednesday was the fifth day (D-5) of the current QQQQ short term down trend.  The GMI-L has fallen to 63 and the GMI-S is now at 19.  Thus, both my long term and short term indicators for the major averages have deteriorated.  I will use any rally to increase my short positions.  More stocks are within 5% of a new low (13%) than a new high (10%).  With inflation back and interest rates headed up, the markets are headed for some tough times.  When they invite Cramer back on the Today Show, this time to talk about a depressed economy and an unending bear market, it will be time to go long again.

Please send your comments to:  silentknight@wishingwealthblog.com.