GMI: +4; QQQQ too tough to call; Some food for thought

The GMI fell to +4 on Thursday, at the same time that the internal indicators showed some strength.  Gmi1222 Between 71-77% of the Nasdaq 100, S&P 500 and Dow 30 stocks advanced on Thursday.  There were 145 new yearly highs in my universe of 4,000 stocks.  But only 46% of the 184 stocks that hit a new high ten days ago closed higher Thursday than they did ten days ago. Buying new highs has not been likely to show a profit.  The Daily QQQQ Index is too close to call.  Thursday was the third day of this down trend (D-3), which shows signs of weakening.  36% of stocks are now in a short term up trend, up from 33% on Tuesday and Wednesday. The percentage of yearly doublers that hit a new high yesterday rose to 13%.  I am doing some nibbling, but the market is on the dividing line between up/down trend.  I am placing small bets until I can determine the short term trend.  The longer term trend remains up, with 65% of stocks above their 10 week averages.  Stocks I am watching (some of which I own) are:  HUM, MSTR, SNDK, AAPL, CHS, GOOG…………….

The great traders (Livermore, Darvas, Loeb) all suggested that one should focus on a small number of leading stocks.  I often say that diversification leads to mediocrity in stock trading.  We want to concentrate in our winners and not have them diluted by our losers.  I just read similar sentiments by William Harnisch, who wrote that diversification is the "plain vanilla of investing." Some food for thought as you mix your egg nog…..

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