IBD

GMI: 5; GMI-S: 44; 2nd day of QQQQ down-trend; buying QID

@ 12:01 am

The markets continued to weaken on Thursday, but the GMI remains at 5.  The GMI-S, however, fell 19, to 44.  None of my four short term indicators for the QQQQ remain positive.  Gmi1221_1 Only 28% of the Nasdaq 100 stocks advanced on Thursday, along with 32% of the S&P 500 stocks and 20% of the Dow 30 stocks.  Only 28% of the IBD 100 list from 12/18 rose and only 28 closed above their close when the list was published.  Growth stocks are clearly hurting.  There were 163 new 52 week highs in my universe of 4,000 stocks.  Only 42% of the Nasdaq 100 stocks have now closed above their 30 day averages, the lowest since last August 9, during the market decline.  Many of my indicators are the weakest they have been since the decline last summer. In view of the developing down-trend in the QQQQ, I am slowly accumulating the ultra inverse QQQQ ETF, QID, which goes up as the QQQQ falls.  This is the first time my IRA can make a good profit from a market decline without the need to purchase put options on individual stocks or indexes.  The QID is leveraged so that it will rise twice as fast as the QQQQ declines.

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GMI: 5; new QQQQ down-trend; Dow theory warning?

@ 12:01 am

NOTE:  THE PROSHARES ETF’S WENT EX-DIVIDEND YESTERDAY AND THEIR PRICES WERE REDUCED BY THE DIVIDEND.

Well, the GMI weakened 1, to 5 on Wednesday.  Only 34% of the Nasdaq 100 stocks rose, as did 51% of the S&P 500 and 33% of the Dow 30 stocks.  Gmi1220_1 43% of the stocks on the IBD 100 list from 12/18 also rose.  After 86 days of an up-trend, the QQQQ is now in a short term down-trend (D-1).  This does not mean that the down-trend will last long.  But for now, I am short the QQQQ (by owning the inverse ETF, QID) and mainly in cash.  The QQQQ is acting very differently than it has been.  AAPL and GOOG continue to weaken, and RIMM is just holding on.  I believe the odds are turning against growth/tech stocks.  As the GMI declines, I will add to my short position.  Stay tuned………………………………..

Ever hear of the Dow theory?  It seems that the Dow Industrials and Dow Transportation averages should each confirm the major trend.Dj20 Has anyone noticed that the Dow Transportation average appears to be faltering?  In fact, one might even see a head and shoulders top in this chart.  Is this another sign of impending market weakness? Why would the transportation stocks be weakening in such a strong economy?

Please note my disclaimer at the bottom of Wednesday’s post.

GMI: 6; No longer long stocks; QID

@ 12:01 am

The GMI held to 6 Tuesday–barely.  Another down day in the QQQQ will reduce the GMI at least one point.  Note there were only 126 new 52 week highs in my universe of 4,000 stocks.  Gmi1219_1 Only 46% of the 514 stocks that hit a new high 10 days ago closed higher on Tuesday than they did 10 days earlier.  Failure of new highs to hold up is a sign of market weakness.  Only 37% of the Nasdaq 100 stocks advanced, along with 57-60% of the S&P 500 and Dow 30  stocks.  The Nasdaq 100 stocks are clearly lagging.  Only 49% of them closed above their 30 day averages, the lowest percentage since this rally began in mid-August, and well down from a peak of 88% reached in October.  The IBD 100 list from 12/18 did better on Tuesday, 54% of them advanced and 72% remain above their 30 day averages. RIMM fell on Tuesday, but GOOG and AAPL bounced…….

I am sorry, but I don’t like this market and I have told you I am a chicken.  It has been 17 days since the QQQQ hit a recovery high, the longest such stretch since this up-turn began in mid-August.  Tuesday was the 86th day of the current up-trend in the QQQQ.  The MACD for the QQQQ continues to decline.  I am out of all of my longs, and holding a small pilot position in the QID.  QID will rise if the QQQQ declines. Meanwhile, I will earn 5% interest in a money market fund as I wait for a clear trend.

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