GMI: +6; QQQQ weakening; All that glitters: GLD

The GMI is still at the maximum level of +6, but I see some serious indications of weakening.  Gmi1216 While there were 148 successful 10 day new highs (stocks that hit a 52 week high 10 days ago and closed higher on Friday than 10 days earlier), they constituted only 47% of the 313 stocks that hit a new high ten days earlier.  There were 173 new highs in my universe of 4,000 stocks on Friday, but only 23% of the Nasdaq 100 stocks advanced.  The S&P 500 stocks (44%) and the Dow 30 stocks (40%) had more advances, but still less than 50%.  Only 46% of stocks are in a short term up-trend, the lowest percentage since November 9.  More bearish was the fact that only 53% of the Nasdaq 100 stocks closed above their 30 day averages, the least since October 28, just before the current rally began.  This time, however, we are coming off of a major advance, and this weakness might signify the beginning of a decline instead of the end. The QQQQ has closed above its 10 week average for seven consecutive weeks and Friday was the 33rd day of the up trend (U-33).  The percentage of stocks closing above their 10 week average is 69%, and suggests that the longer term up trend is still intact. 

The WPM shows the major short term weakness in the QQQQ as well as in the S&P Wpm1216_1small cap stocks (IJR). Only 53% of the Nasdaq 100 component stocks and 54% of the S&P small cap stocks closed above their 30 day averages.  The other indexes appear to be stronger, with the S&P 500 (SPY) stocks doing the best (72%).  The longer term indicators are stronger for the Dow 30 stocks (77% above their 30 week averages) and the S&P 500 stocks (71%)…….

I have moved all of my sell stops to just below their moving averages and have been getting gradually sold out.  Two days of closes of the QQQQ below 41.30 (closed at 41.58) would make me exit this market.  I have successfully avoided market declines since 1995 because I am such a chicken.  The key to successful trading is to conserve capital so as to be able to remain in the game. I can always wade back in when the market strengthens………..

BE CAREFUL OF GOLD! Too many pundits are touting its value.  Look at the weekly chart of the ETF that tracks the price of gold (10x).Gld  There was a high volume reversal this week with a high of 53.73, a low of 49.93 and a close of 50.09, down 2.31 for the week.  The weekly volume was the highest since this ETF began trading at the end of November, 2004.  This may not be the ideal time to test our "mettle" by chasing gold. This most recent rise began in mid-November after a six week consolidation.  Better to buy on the breakout from a new consolidation, rather than after a substantial rise from a base…………

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