ETF

The GMI remains at the maximum of 6. I do not   post daily to this blog anymore, but plan to post any day that the GMI changes.   The GMI has been 5 or 6 since the close on March 21. In that time, the QQQQ has increased   +5.2%, the SPY is up +4.35% and the DIA is up +5.6%.   If we had simply bought and held the ultra ETF’s on these indexes during this period we would have made 9.35% (QLD), 7.73% (SSO) or 10.08% (DDM).   For me, this is the preferred way to trade with minimum stress. So, why did I miss this trade?   Simply because I ignored my instruments (the GMI) and was afraid to follow them after the February decline……

I have added an indicator to the GMI table.   The Worden indicator T2108, that is available on TC2007, calculates the percentage of all stocks that closed above their 40 day moving average. This indicator acts like a pendulum that can reflect the market extremes. Readings above 80% often occur near market tops and bottoms often occur when the index is below 25.   No indicator is infallible, but I think this indicator provides an idea of when the market is at extreme.   Last week this indicator hit a high of 80.62% and closed at 76.64%. It seems to me we are much closer to a market top than to a bottom, but the GMI is still 6…..

The GMI is still 5, and the QQQQ is in its third day in its short term down-trend.  Furthermore, the QQQQ,  SPY  and DIA index ETF’s have all closed below their 10 week averages.  During such periods I am unlikely to make money by staying long.  The 30 day average for the QQQQ has now completed a rounding top and is now declining.  Since the Nasdaq 100 index reached its closing peak on February 22, that index has declined 4.16% and 78% of the Nasdaq 100 component stocks closed Friday below their close on 2/22; one half are down 5% or more from 2/22.  Don’t fight the trend of the indexes–go with the odds.

For the first time since February 26, the GMI is back to the maximum reading of 6.  The GMI-S is at 75; all four index ETF’s are in synch.  94-97% of the stocks in the Nasdaq 100, S&P 500 and Dow 30 indexes rose on Wednesday.  The end of first quarter and anticipatory earnings release season rally I have been anticipating is here.  There were 245 new highs in my universe of 4,000 stocks.  57% of the Nasdaq 100 stocks have now closed above their 30 day averages and 58% of my stock universe are above their 10 week averages.  These stats are almost back to where they were before the big decline on February 27. It is time for me to be long and to hold no shorts.  The QQQQ is in its first day of a new up-trend. Stocks I have been nibbling at include HURC and NUAN. I also own X and WCG and am looking to go back into the ultra QQQQ ETF, QLD.