GMI: 6; Window dressing over; October surprise?

The GMI held at +6 and window dressing will come to an end on Friday.  Between 53-61% of the stocks in the Nasdaq 100, S&P 500 and Dow 30 indexes rose on Thursday.  Gmi0928 There were 170 new highs in my universe of 4,000 stocks.  72% of the stocks that hit a new high 10 days ago closed higher on Thursday than they closed 10 days earlier.  Thus, buying new highs has likely to have been a profitable strategy. The QQQQ is in its 29th day of an up-trend and has closed above its 10 week average for 7 consecutive weeks.  When the QQQQ remains above its rising 10 week average, I typically make money trading on the long side. Since the beginning of the QQQQ up-trend in mid-August, that index has risen 8.3% and 81% of the Nasdaq 100 stocks have advanced; 38% of the stocks are up 10% or more.  Riding with the market trend has produced splendid odds of making a profit.  In comparison, only 51% of the IBD 100 stocks posted on 5/15 have advanced during the same period…

We are now approaching the terrible month of October when many large declines have occurred and important bottoms have been put in.  I have often times gone to cash in October and bought back in in early November.  Studies have shown that the period from November through April contains a disproportionate amount of market gains.  But everyone is so smart now and expects an October decline first, before we get the end of year strength.  With the GMI indicators so strong, this might be the time that October fools the masses.  I would not be surprised to see an early sharp decline followed by a strong rebound that leaves many skeptics behind.

Please send your comments to:

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.