IBD

GMI: 2; GMI-R: 2; 8th day of QQQQ down-trend; Stage 4?

@ 12:15 pm

The GMI and GMI-R are back to 2. There were 45 new highs and 279 new lows in my universe of 4,000 stocks on Friday.  The QQQQ is in the 8th day of its down-trend.  I am mainly in QID and hedged in covered calls on some of the strongest IBD100 growth stocks. The QQQQ is only 0.32 above its declining 30 week average (see weekly chart below). If the QQQQ closes below its declining 30 week average it will confirm a Stan Weinstein Stage 4 down-trend typical of bear markets. 2NDLEGqqqq

The SPY and DIA have already done so. Only 21% of the Nasdaq 100 stocks closed above their 30 day averages; the last time it was below 21% was during last March's decline.  It's beginning to look like the rise since last March was a retracement of the decline from the October 2007 top, and that a second leg down is beginning. The Worden T2108 indicator is now at 23%, still above the extreme low levels reached at the bottom of most declines.

GMI: 3; GMI-R: 6; Critical juncture; China stocks toppy?

@ 10:58 pm

The GMI is at 3 (of 6) and the GMI-R is 6 (of 10). The GMI-R is more sensitive to short term trends and reflects the growing strength in the QQQQ.  There were 91 new highs and 92 new lows in my universe of 4,000 stocks on Monday.  The QQQQ is right up against resistance. A close above 49 will push the GMI into bullish territory.  The strength in RIMM and the fact that the IBD Growth Mutual Fund Index has retaken its 50 day average suggest to me that this rally may have further to go, at least through option expiration this Friday.  ChinaETF

Meanwhile, I think that China stocks are about to break down.  A lot of individual China stocks (CHA, SNP,  PTR, LFC, CHL, ACH, JFC, GCH, CEA, ZNH, CHN) have the reversal pattern reflected in this ETF, FXI.  Note the reversal in the 30 week moving average (red line).  I would not hold any stocks with this ominous pattern; I own puts on LFC.

GMI: 5; GMI-R: 8; 48th day of QQQQ up-trend; 19 IBD100 stocks at new highs

@ 8:00 am

The GMI (General Market Index is now at 5 (of 6) and the GMI-R (GMI, revised) is now at 8 (of 10). (Click on table to enlarge.)GMI0530

There were 86 new highs and 41 new lows in my universe of 4,000 stocks on Friday.  The QQQQ has been in an up-trend for 48 days.  Over that time, the QQQQ has risen 10.2% and the ultra long QQQQ ETF, QLD, has advanced 18.9%.  So if one just rode the trend in the QLD, one could have had a very nice portfolio performance, indeed!  I meet so many traders who think they must get in and out of the market and trade every dip.  But as Jesse Livermore wrote over a half century ago, the way to make big money in the market is to determine the change in trend and to ride it until it ends…..

The IBD100 stocks have been doing well lately. The list of stocks on the IBD100 list published on April 7 provides a good example.  In about two months, 67% have advanced, 45% by more than 12% and 32% are up more than 20%.  In fact the top 10 gainers are up 32-94%.  The leader is CLR (+94%), followed by TTES and GHM (+40%) and ISYS (+39%).  Today's new IBD100 list has a lot of promising stocks on it, including 19 which hit a new high on Friday:  ISYS,KSU,WDC,ANSS,SOHU,CLR,NDSN,SQM,FLS,GLF,WFT,
CLHB,HIL,MA,GDI,WTI,DR,GMXR,AXYS.  I bet some of this summer's big winners are on this list…..