GMI: 6; IBD100 stocks out-perform Nasdaq100 and S&P500 stocks

The GMI is still at a maximum reading of 6.  Gmi1012 But there were only 125 new highs in my universe of 4,000 stocks on Friday, down from 484 on Thursday and over 200 each other day last week.  And the Worden T2108 indicator is now at 74%, down from a high of 82% on October 5.  This Worden indicator can take a long time to top out as it remains in the 70-80 area.  The QQQQ completed the 31st day of its short term up-trend on Friday.  The last two recent large up-trends lasted 80 days and 86 days, suggesting that this QQQQ up-trend could have further to go.  I have learned over the years that it is futile to try to anticipate market turns.  It is far better to wait until my GMI signals the turn has occurred.  Of course, this means that I lose some profits as the top is formed.  However, I prefer to take this approach over  trying repeatedly (and mistakenly) to predict the turn….

People often tell me that the IBD 100 stocks under-perform the market because once they are added to the list they top out or recede.  Unlike most people with answers, I have data.  And the data indicate the absurdity of this assertion, at least in recent weeks.  Ibdperf101507 This table (click on to enlarge) shows the performance of select IBD 100 stock lists published in the past year.  A larger percentage (82-93%) of the stocks in each list the past six months closed Friday above their 30 day average than did the Nasdaq 100 (73%) or S&P 500 stocks (76%).  Similarly, the last 3 lists contained more stocks likely to be within 5% of their 52 week highs.  Finally, all of the IBD 100 stock lists over the past year had higher median changes (+9-20%) during the past 30 days than the Nasdaq 100 (7%) or S&P 500 stocks (6%).  (A median chnage of 6% means that one half of the stocks advanced more than 6% and one half less than 6% during the past month). Of course, the median chnage of +20% seen in today’s new list is influenced by the fact that  IBD adds to the list and retains each week only the strongest stocks, also reflected in the fact that 93% of the stocks in today’s list closed above their 30 day average. So, looking for winners among recent IBD 100 stocks might be a good strategy.  The past few months I have had considerable success selling near month covered calls on up-trending IBD 100 stocks and have been achieving 3-5% profits each month.  This Friday, options expire and I cash in again….


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