GMI: +6; Indexes showing strength; Stocks I am watching; I-bonds

Well, things came through on Friday and the GMI is back to +6.  There were 272 new yearly highs and only 40 new lows in my universe of 4,000 stocks.  Gmi930_1 Almost one half (48%) of the stocks are above their 10 week averages and 30% are in a short term up-trend, up from 24% at the beginning of last week.  On Friday, 78% of the Nasdaq 100 stocks rose, 65% of the S&P 500 and 57% of the Dow 30 stocks.  The growing strength in the Nasdaq 100 stocks is evident in  the fact that 57% are now above their 30 day averages, up from a low of 28% on 9/22.  The Nasdaq may lead this market up.   We are now in day one (U-1) of the new QQQQ up-trend.

The WPM shows the broad reversal in the five indexes.Wpm930 All indexes are above their 30 day and 30 week moving averages.  Their component stocks also showed strength with 50-57% of the stocks closing above their 30 day averages.  Between 57-60% of the component s of all of the indexes but the Dow 30 (DIA, 43%) closed above their 30 week averages. The weakest stocks in the Dow include:  DD, WMT, MRK, AA, MMM, JNJ, DIS, PFE and GM–all well below their 30 week averages,  a key negative according to Weinstein’s stage analysis (see his excellent book, listed at right).

I closed out my shorts last week.  I remain very cautious until I see whether there is any follow-through this week.  Was last week’s strength merely end of quarter buying by the funds? I rarely see so many reversals in my indicators, which are designed to detect meaningful changes in trends.  I will need to see a few more up days for me to become confident enough to take on new long positions.  October has always been a difficult month, but October declines often set the stage for a good end-of-year rally. Stocks I am watching, some of which I own, include:  ADSK, CX, NSC, HTN, VLO, AAPL , ISRG and NX……………..

By the way, if you do not know about I-bonds, check them out here.  I use these U.S. government bonds for savings that I will not touch for a long time, instead of keeping the money in a bank.  I-bonds are protected against inflation and have been a great place to put my kids’ savings……….

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