GMI: 5; GMI-S: 31; The Dow’s dirty little secret;

We  keep hearing about how the Dow is at an all-time high.  I looked at the price range of the 30 Dow stocks since the bubble top in 2000.  Was I surprised to find that only 10 of the 30 stocks (33%) surpassed their 1999/2000 top in 2006:  CAT, XOM, BA, AXP, JNJ, MO, C, UTX, MMM and PG.  The fact that the Dow 30 average reached an all time high in 2006 is meaningless when 20 of the 30 stocks never got above their 1999/2000 bubble peaks!  It all boils down to media hype to get unsuspecting investors to enter this record high market

Meanwhile the GMI closed on Friday at 5 but the GMI-S fell 19, to 31. Gmi1229_1 With the media talking about another great year, it is interesting that my short term indicators for the Nasdaq 100 stocks and the S&P 600 Small Cap stocks are all negative.  Only 18% of the Nasdaq 100 and S&P 500 stocks rose on Friday, along with 23% of the Dow 30 stocks.  Just 33% of the Nasdaq 100 stocks have closed above their 30 day averages.  Only 18% of the IBD 100 list from 12/18 advanced and only 29% closed higher than they did on 12/18.  Friday was the 7th day in the current QQQQ down-trend.

So, rather than try to predict the market, we need to look at what the market is doing now.  The Nasdaq 100 stocks clearly are in a short term down-trend.  The past leaders, RIMM, AAPL and GOOG, all look tired, and it has been several weeks since they hit new highs. Since the QQQQ hit a new high on 11/24, it has fallen 3.34% and 63% of the Nasdaq 100 stocks have declined.  In fact, only 26% of the Nasdaq 100 stocks are up 1% or more since 11/24.  With odds like these, I am mainly in cash and ready to accumulate more QID if the QQQQ continues to weaken.



2 thoughts on “GMI: 5; GMI-S: 31; The Dow’s dirty little secret;”

  1. Thanks for the email.

    In looking at this further, I have to ask you about CAT, JNJ, and MMM, all of whom appear to be above their 2000 highs when adjusted for splits. MCD is actually above its 2000 high, but not above its 1999 high.

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