Month: May 2006

The GMI remains at zero, but now all 16 of my short term indicators are also negative, with the GMI-S=0.  Only 29%of the Nasdaq 100 and S&P 500 stocks advanced on Tuesday along with 40% of the Dow 30 stocks.  Only 7% of the 4,000 stocks in my universe are in a short term up trend, the lowest since I started keeping records a year ago.  Only 21% of stocks closed above their longer term 10 week averages, the lowest since last October.  There were 25 new highs and 88 new lows.  Tuesday was the ninth day (D-9) in the current QQQQ short term down trend.  In spite of this confirmed down trend it is noteworthy that the media pundits continue to look for stocks for the public to buy.  You would think they would have learned something from the last bear market.  This is the time to be in cash or short until the market confirms a change in trend.

I thought you might like to see another stock that I have shorted.  Given the down cycle in housing and construction, it was not hard to spot the decay of this leader. BMHC had a 7x increase since mid 2003.  Now look at the weekly chart as the big boys unload the stock.  There are many high volume down weeks as the 30 week average curves down and the 10 week average (dotted line) breaks below the 30 week (red line).  The stock  peaked about seven months ago and the back and forth movement seems to be over as the stock failed to regain the 10 week average.  This stock may be starting a long Stage 4 decline, a la Weinstein (see book to right).  BMHC has many of the characteristics O’Neil mentions for a good short sale.

Please send your comments to:  silentknight@wishingwealthblog.com.