GMI declines to +3; Down trend begins

Well, the GMI declined to +3 and the new down trend has begun.  Gmi1220 Only 33% of the 359 stocks that hit a new high ten days ago closed higher on Tuesday than they did ten days earlier.  There were only 78 new yearly highs in my universe of 4,000 stocks and 84 new lows.  More new lows than highs is a serious omen. 44% of the Nasdaq 100 stocks rose on Tuesday, along with 51% of the S&P 500 stocks and 33% of the Dow 30 stocks.  Only 33% of stocks are in a short term up trend and only 6% of stocks that have doubled the past year hit a new high on Tuesday.  The leaders are stalled. I am 100% cash in my trading account.  While the indicators suggest that the longer term up trend is intact, the rally that began in October is over and Tuesday was the first day in the new short term down trend (D-1)………………

We will have to wait to find out whether this down trend turns into a longer decline. For now, the odds of making money on the long side are against us.  In fact, since the QQQQ topped out on 12/6 at a peak of 42.31, the index has declined by 2.36% and 63% of the Nasdaq 100 stocks closed lower on Tuesday than they closed on December 6.  Wonder why we have losses the past couple of weeks?  Two to one odds are just too negative for me to trade on the long side. This is a time to be on the sidelines or at least to play short stop…………….

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