Pundits blind to market strength; QQQQ vs. Comp; GMI: +6; Stocks I like

To my visitors: I am only one trader, not a guru, and not a financial advisor.  I am presenting my own opinions and my own experiences and people are welcome to decide for themselves what, if anything, on this site is of value to them.  Please refer to the additional comments, highlighted in red, at the end of this post.

I watched some of the Cost of Freedom shows on Fox on Saturday and was struck by the focus on terrorism.  Imagine wasting viewers’ time by asking the financial pundits what American policy about terrorism should be! The fact that the market held Thursday and Friday did not garner much attention.  Gmi708 I may be wrong, but the strong market last week after the events in London made me really bullish.  The GMI is even back to +6. The market was very strong on Friday.  There were 151 successful 10 day highs–84% of the 181 stocks that hit a new high 10 days ago closed higher on Friday than 10 days earlier.  There were a stunning 478 new highs in my universe of 4,000 stocks and only 6 new lows.  More than half (53%) of the 4,000 stocks are in a short term up-trend and 79% of them closed above their 10 week average.  On Friday, 85-93% of the Nasdaq 100, S&P 500 and Dow 30 stocks advanced.  We are now in day 1 (U-1) of an up-trend.  So, why aren’t the media pundits more bullish–it must be a conundrum……………………………

I noticed a divergence between the Nasdaq Composite index and the Nasdaq 100 index, which I have been keying on.  Between 6/2-7/7, the QQQQ (which tracks the Nasdaq 100) declined 4.1%, while the Comp Index declined just 1.0%.  If I had been focusing on the Comp instead of the QQQQ, the GMI would have held up much better and kept me more bullish.  What is the difference between the Nasdaq 100 (QQQQ) index and the Comp?  The QQQQ tracks "all the stocks in the Nasdaq-100 Index, which consists of the largest nonfinancial securities listed on the Nasdaq Stock Market. "  The stocks that are excluded from the QQQQ must be  outperforming the tech stocks in the QQQQ–that is why the Comp performed better during the decline.  I have therefore been thinking about restructuring the GMI to include/replace the Comp.  Any suggestions?…………………………………….

How long will this rise last?  You know better than to ask– the truth is no one knows.  But I am placing my bets on the long side, in case we have a follow through rally as earnings come out the next few weeks.  I like lots of companies, including MW, BBY, HANS, KOMG, FTO, HITK, IVGN, GME, WFMI, GDW, DSL, NDAQ, NTRI–many of which I own.

I would greatly appreciate some reader reactions.  Is my blog of value to you?  What else would you like me to discuss?  Send me your feedback at: silentknight@wishingwealthblog.com.

Please remember that the stock market is a risky place, especially now.  I am not providing recommendations for you to follow.  My goal is to share tools and methods that I have used over the past 40 years of trading, so that you may learn from them and adapt them to your trading style and needs.  While I do my best, I do not guarantee the accuracy of any statistics computed or any resources linked to my blog.  Please consult with your financial adviser and a mental health practitioner before you enter the stock market,  and please do not take unaffordable risks in the current market environment.  See the About section for more statements designed to protect you (and me) as you navigate this market. Past performance does not guarantee future results, but I would rather learn from a former winner than a loser.

3 thoughts on “Pundits blind to market strength; QQQQ vs. Comp; GMI: +6; Stocks I like”

  1. Hi Eric,

    This GMI index is a thing of beauty – keeping us on the market’s side. I’m ready for action. Keep up the good work.



  2. You take requests, eh? Well, there’s always strategy talk. Or you can go in-depth on the individual parts (short-term uptrends and such) of the GMI you track.

    As far as include v. replace the Nasdaq portion of the GMI, I’d say include wins out over replace. Try observing both for a quarter or two and try to determine if one more accurately signals the growth stock trends you’re looking for consistently.

    Off topic, I thought between the Bulls & Bears and Cavuto bunch, the talking heads were fairly bullish. I’m a bit more on the fence.

    As always, I’ll stayed tuned.

  3. I have been reading your blog from pretty much its beginning. Your focus and detailed analysis of the overall general market condition is usually right on track. It appears that you make pretty quick entry and exit decisions based on your indicators.

    It would be of interest to me to see and read your thoughts on individual stocks – posting the charts and your annotated comments. I’m always interested to see how a skilled investor like yourself analyzes a stock. Do you strictly abide by the CANSLIM guidelines or have you tweaked that a bit to your own liking ?

    Thanks for sharing your thoughts on the markets and keep up the good work.

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