Corrected GMI still: +1; Weakness persists

Gmi1006_1 The GMI is still +1 and the market internals deteriorated Thursday.  (I erred yesterday in saying that the QQQQ Weekly Index was negative, so yesterday’s GMI was actually +1.) There were only 22 successful 10 day new highs, the least since I started counting this statistic in May.  There were 107 successful 10 day new lows, the most I ever counted.  Clearly, buying new highs 10 days ago in the hope of making a profit has been unlikely to work out, and was far less successful than shorting new lows.  Only 26% f the 4,000 stocks in my universe are in a short term up-trend, and only 30% are above their 10 week averages.  There were 28 new highs and 152 new lows on Thursday.  Only 23% of the Nasdaq 100 stocks rose, along with 30-31% of the S&P 500 and Dow 30 stocks.  More stocks are now within 5% of hitting a new low (13%) than of hitting a new high (11%).  Thursday was the second day  (D-2) in the QQQQ down-trend……………

I am therefore mainly in cash.  I will use any bounce to unload my few holdings if they start to weaken again.  The trading gurus I admire all said to get out of the market when the trend is down–except to take the short side.  With more daily lows than highs and with more stocks near new lows, taking the long side is clearly going against the trend………..

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1 thought on “Corrected GMI still: +1; Weakness persists”

  1. Hi Eric,

    I went totally into cash based on the market trends and to prevent my longs stock with small profits from becoming small losses. I learned alot over the last month of trading. 1. Follow my plan – of taking profits when I am up 15 to 20 %. 2. Listen to what the market is telling me ala “the Big Picture” and the “General Markets” section of IBD. 2. I sucessfully fought the urge to Average down, wow that was a positive by itself.

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