Technical Analysis

Jon Stewart: media pundits failed us–but I wrote last June that banks and markets looked sick

@ 11:33 pm
GMI0/6
GMI-R2/10
T210822%

It’s is great that Jon Stewart informed the world last week that the media pundits at CNBC   failed to provide accurate information about the impending financial crisis.   But by using technical analysis, I warned my readers last June what the charts were telling me and transferred my pension money   out of mutual funds to money market funds:

“Look at this weekly chart of   Bank of America (red line= 30week average; click on chart to enlarge). Other bank stocks with similar charts include : WB, UBS, STI, and DB.   When major bank stocks are in a free-fall, can the rest of the market be far behind?” (Posted on June 8, 2008)

The media pundits and the financial advisers are self-serving when they try to convince us that we need their wise counsel.   I say that one can rely on the market itself to alert us to danger. I use the TC2007 charting program to analyze the market trend and post my conclusions on this blog.   I know a lot of you have used my blog to protect yourselves….

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Jim Cramer finds (TA) religion; TSYS: cup with handle breakout? Indexes are weak, but some promising IBD100 stocks appear

@ 9:39 am
GMI1/6
GMI-R4/10
T210840%

I know that the GMI has kept me and, I hope others, out of the long side of this market since at least August 2008, the last time that the GMI was 4.   I prefer the GMI to be at least 4 before I commit many IRA funds, and especially my university pension,   to the long side.   Since the GMI fell below 4 in late August, the QQQQ (Nasdaq100) and SPY(S&P 500) have declined 35%, and the DIA (Dow 30), by 31%.   During that same time period, 95% of the Nasdaq 100 stocks declined, 36% have declined more than 40%.   The biggest losers in the Nasdaq100 component stocks includes such well respected stocks as: RIMM, ISRG, and DELL (each down 63%), and JOYG (-69%)   and WYNN (-72%). As to   the “safe, buy and hold” Dow 30 stocks; 100% declined in this period, with whopping declines in: AXP (-58%), GE (-60%), GM (-75%), AA (-76%), C (-80%) and BAC (-81%).   Do you see why it does not make sense to fight the general market’s trend, as reflected in the GMI!

Speaking of the GMI, the table below shows

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I’m up 1200%, as my fellow boomers and college students get screwed again; QQQQ in 17th day of short term up-trend; GMI: 2; GMI-R: 6; T2108: 83%; 10 IBD100 stocks at new highs

@ 12:01 am

I escaped 2008 with a small loss in my account (-5%).   Not bad, compared to how the indexes did (down 35-40%), but not great, given that I did trade some short positions (with puts) during the year.   On December 24, IBD published a table listing the performance of the best growth mutual funds since April, 1994.   The top fund was up +382% since 1994.   My IRA account remains up a little more than 1200% (13x) since late 1994, so I do not feel that bad about my performance this year.   The key to my success is that I made money during the strong market rises and kept it, by being mainly out of the market during the major declines.   I might add that while I traded in my IRA during the huge declines in 2000-2002 and 2008, I avoided major losses in my university pension plan by transferring from mutual funds into a money market fund during these declines.   So, I have learned the painful lesson over my 40+ years of trading that the key to success is conservation of capital during the inevitable market down-trends.   These declines can be detected   long before they reach the panic phase when they become evident to everyone. I have developed rules for identifying the market’s trend early, that I post each market day in this blog, in the form of the GMI and GMI-R…..

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