Month: June 2006

The GMI rose to +2, as there were 115 new highs (20 new lows) in my universe of 4,000 stocks on Friday.  There were also 6 successful 10 day new highs; 55% of the 11 stocks that hit a new high 10 days ago closed higher on Friday than they closed 10 days earlier.  While this is a small number, it does show that one had a 55% chance of making a profit by buying new highs 10 days ago and holding them until Friday.  In contrast, only 40% of new lows 10 days ago might have produced a profitable short trade.  The GMI long and short term indexes also improved on Friday.  63% of the GMI-L indicators are now positive as well as 44% of the GMI-S indicators.  Each index measures 4 trend indicators each for the DIA, IJR, SPY and QQQQ.  Friday was the sixteenth day of the current short term down-trend in the QQQQ, and the QQQQ remains below its 10 week average.  I am most likely to make money trading when the QQQQ is consistently above its 10 week moving average……

The IBD 100 stocks and my universe of 4,000 stocks have performed similarly recently.  In a strong market the IBD 100 growth stocks with great technicals and fundamentals typically outperform other stocks.  On Friday, 58% of my universe advanced, as did 60% of the IBD 100 stocks.  But 43% of my universe closed higher than they opened on Friday, compared with 28% of the IBD 100 stocks.  Only 3% of my universe hit a new high, as did 4% of the IBD 100.  18% of my universe stocks are in a short term up-trend, compared with 16% of the IBD 100.  The IBD 100 stocks are still much more likely to have closed above their 10 and 30 week averages.  Furthermore the IBD 100 stocks were more likely to have found support at their 10 week averages (23% vs. 17%). 

What this all boils down to is that the IBD 100 stocks and my universe of stocks are all showing short term strength, as all stocks are recovering from their recent declines.  Note, however, that since this list of IBD 100 stocks was posted on 5/15, only 32% of the stocks closed higher on Friday than they did on 5/15.  Put another way, 68% of the IBD 100 stocks have declined since the list was published.  IBD has been repeatedly noting that one should not fight the market trend, and that  in a weak market most IBD 100 growth type stocks will decline in spite of their great fundamentals and technicals.   Even after this short decline, the IBD 100 growth stocks remain in much better longer term technical shape than the rest of the market, as measured by  their 10 and 30 week averages.  In addition, even after the current weakness in the general market, 18% of my universe of stocks are within 5% of a new high, and only 8% are within 5% of a new low.   The four IBD 100 stocks that hit a new high on Friday were HOC, OII, IFO, SPSS.  When most stocks are weak, it is easier to see the winners……………

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

The GMI rose to +1 because 58% of the stocks that hit a new high 10 days ago closed higher on Thursday than they did 10 days before.  For the first time in a while, buying new highs was likely to have been profitable. The other 5 indicators remain negative.  The short term GMI-S rose to +25.  It is too soon to tell whether this  bounce will become a major up-trend.  88-92% of the stocks in the Nasdaq 100, S&P 500 and the Dow 30 rose on Thursday.  There were 81 new highs and 26 new lows in my stock universe. 16% of the stocks in my universe of 4,000 are within 5% of a new high, and only 9% are that close to a new low.Thursday was the fifteenth day (D-15) in the current QQQQ short term down-trend……..

The IBD 100 growth stocks did quite well on Thursday.  84% rose and 85% closed higher then they opened.  81% closed above their 10 day averages.  Still only 8% hit a new high and only 40% of stocks are above their key 30 day average and only 12% are in a short term-up trend.  29% bounced above their 10 week average–a sign of possible support.  The longer term trend looks better for the IBD 100 stocks, with 89% closing above their 30 week averages…….

I am nibbling at  1-2 break-out stocks but with the GMI at +1, I remain mostly in cash and in a few puts.  Failure of this rally could lead to a significant decline.

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

The GMI remains at zero and there is no reason to change from a defensive posture.  78% of the Nasdaq 100 stocks advanced on Wednesday, along with 84% of the S&P 500 stocks and 90% of the Dow 30 stocks.  There were still more new lows than new highs (66/41) in my universe of 4,000 stocks.  Wednesday was the fourteenth day (D-14) in the QQQQ short term down-trend.

23% of the Nasdaq 100 stocks closed above their 30 day averages, up from a low of 11% on 5/23.  28% are now above their 10 week averages, up from a low of 21% on 5/23.  12% of the Nasdaq 100 stocks are in a short term up- trend, up from a low of 6% on 5/24.  So, although the indicators remain very negative, they have moved up from their recent lows. 

The IBD 100 growth stocks performed much like my universe of stocks. 75-79% of both groups of stocks advanced on Wednesday and 68-70% closed higher then their opening prices.  However, only 26% of my universe of stocks closed above their 30 day averages, as did 30% of the IBD 100 stocks.  Only 10-12% of both groups are in a short term up-trend.  The longer term trends are still stronger for the IBD 100 growth stocks than for my general universe of stocks; many more IBD 100 stocks closed above their 10 and 30 week averages.

I remain mainly in cash and holding some puts.  I like corrections, however, because it is easier to find the next set of leaders.  The next leaders tend to be among the first to hit new highs.  Today, there were 41 new highs.  Among them were three  stocks that had triple digit earnings gains in the most recent quarter:  GLBL, IFO and WHQ.  These stocks may be worth watching when the market turns……………..

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