IBD

The GMI remains at +6, as the market continues to strengthen.  There were 332 new highs on Monday, the most since September 9.  There were 183 stocks that hit a new high 10 days ago and closed higher Monday than 10 days earlier. Buying stocks at new highs 10 days ago has therefore been likely (69%) to have been profitable. The IBD Mutual Fund Index is now well above its 50 day average, indicating that growth stocks are rising.  More than one half  (52%) of the 4,000 stocks in my universe of stocks closed above their 10 week averages, and 32% are now in a short term up-trend.  29% of these stocks are now within 5% of their yearly highs and only 8% are near new lows.  The Dow 30 stocks remain the weakest stocks, with only 33% rising on Monday, compared with 58% of the Nasdaq 100 stocks and 48% of the S&P 500 stocks.  Monday was day two (U-2) of the QQQQ up-trend………………..

While there were 332 new highs yesterday, there was also a relatively large number (129) of new lows.  This suggests considerable variability in performance.  What sectors are  strong vs. weak?  Between 9/21-10/3 (since the QQQQ bottomed out) the following sectors rose the most:  Semiconductor-memory chips (+8.9%), Internet software and services (+8.4%), Apparel stores (+8.1%), General contractors (+7.6%) and copper (+7.3%).  The weakest were: Aluminum (-3.5%), Mortgage Investment (-3.3%), Nonmetallic Mineral Mining (-2.1%), Electronic Equipment (-1.9%), and Beverages-Brewers (-1.9%).  The strongest stocks in the strongest sector, semiconductor-memory chips, in descending order were:  LEXR, FLSH, MU, RMBS, ALSC, which were up 10%-32% during this 8 day period when the QQQQ rose 2.8%……………..

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I got back too late from the IBD Meetup to do a full post.  The GMI remains at +2 and there were no significant changes in my market indicators.  I think we will have to wait until next week when the end of the quarter "window dressing" by the mutual funds is finished.  Early October should reveal the market’s direction.

Not much change in my indicators Tuesday.  The GMI remains at +2.   Between 40-50% of the stocks in the Nasdaq 100, S&P 500 and Dow 30 indexes rose.  There were only 67 successful 10 day new highs–stocks that hit a new high 10 days ago and closed higher Tuesday than 10 days earlier.  Buying new highs has not been a strategy likely to show profits.  With only 25% of stocks in a short term up-trend, this is not the time to be positioned long on many stocks.

Nevertheless, I could not resist buying some ADSK and ISRG.  Note the above average up volume Tuesday on ISRG as it broke above its 30 day average (red line, click on to enlarge).  ISRG looks like it has completed its consolidation after a huge move in July. Both stocks seem to be bouncing from support, probably in anticipation of good 3rd quarter earnings.  I bought these and immediately placed stop losses below their moving averages.  I am still mostly short and in cash.

Tonight is the monthly IBD meetup and I will be able to  assess group sentiment.

Please send me your feedback at: silentknight@wishingwealthblog.com.