“October. This is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.”
Mark Twain, The Tragedy of Pudd’nhead Wilson, 13, 1894
Why did Mark Twain pick on October first, 35 years before the big crash? Was he a closet market technician into long term cycles? However, he was smart enough to protect his reputation by naming a few other months.
The WW-GMI is not a leading indicator. It is a summary of the indicators I watch to tell me the current trend. By definition, the index will not register a strong market until after the turn has come. The WW-GMI is still zero. (click on the table to enlarge) There were only 12 “successful” 10 day new highs today. (See prior posts for indicator definitions.) However, we did see that 88/4000 stocks hit a 52 week high today. The QQQQ would have to close above 35.84 to get me interested. It closed at 35.12. The SPY would have to close above 116.70, it closed today not too far away, at 116.40. Note that I said, to get me interested, not to get me confident to buy. I expect that the end of this decline will come with a bang, not a whimper. But I never marry a scenario. I just wait to see how the market behaves. You have to observe the glass carefully for a while to determine if it was half full or half empty.
Everyone is glued to the Fed tomorrow. It is possible they could say something that could make this market explode to the upside. However, I shall wait until things happen, and will not jump the gun. Right now, my portfolio is 10% short, all through owning puts that expire at least 2 months from now. I can afford to wait out any minor bounce, as long as the indexes do not violate their downtrends. If they do, I will sell the puts. I never go against the trend. In a coming post, I will describe why I think buying puts in a declining market makes sense (and dollars). I also think that put options can be used with minimal risk and will show you how.
Many thanks to www.thekirkreport.com for mentioning my blog. I check Kirk’s blog every day for his keen insights, and welcome his referrals. Check some of my earlier posts to undertstand my trading philosophy and background.