While the GMI remains at +6, a lot of my internal market indicators are weakening. There were only 114 new highs in my universe of 4,000 stocks and the percentage of Nasdaq 100 stocks closing above their 30 day averages fell from 62% to 46%. A close below the 30 day average is frequently a sign of impending weakness for momentum stocks. Only 15% of Nasdaq 100 stocks advanced on Wednesday, along with 30-31% of the stocks in the S&P 500 and Dow 30 indexes. The percentage of stocks closing above their 10 week average has declined from 64% on Monday to 53% on Wednesday. The DIA has closed just below its 30 day average and the SPY and QQQQ are very close to their 30 day averages. Sustained closes of these indexes below their 30 days will trigger reductions in the GMI very soon. Bottom line–I am becoming more defensive and will go short or in cash if the indexes do not bounce soon.
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