GMI: 0; GMI-R: 0; Masochists holding stocks

The GMI and GMI-R are back to zero.  Gmiperf1126(Click on the figure to enlarge.)  The QQQQ is in the eleventh day of its short term decline.  Only 3% of the Nasdaq 100 stocks closed Monday above their 30 day averages.  This is the lowest percentage since I began recording these stats two years ago.  The fact that the GMI is now zero and that many of my indicators are hitting new lows suggests to me that the market is entering a longer term decline. Anyone who refuses to go to cash and is holding on to stocks should examine his/her motivation.  It took me almost 40 years to learn to get out of the market when it is in a confirmed down-trend and to avoid giving up my profits from the prior rally.  As the great trader Jesse Livermore used to say, we should fear when a stock falls and hope when it rises.  Most unsuccessful traders, he maintained, do the opposite.  They hope for a profit when they have a loss and fear losing a profit when they have a gain.  Most people holding stocks now are reduced to praying for the market to bail them out.  As Livermore once opined during an imminent decline, such persons are now about to suffer amputation without an anesthetic………….


3 thoughts on “GMI: 0; GMI-R: 0; Masochists holding stocks”

  1. I’m 100% cash as well…

    I think a lot of the problems emerging now were kept hidden by Wall Street games. The housing market bubble is larger than the Nasdaq bubble which resulted in a 78% decline of the Nasdaq Index.

    My guess is that this downturn may not be as severe but will last twice as long — possibly 4-5 years — as the housing bubble is less likely to crash but rather deflate slowly for years… bringing down banks like Citigroup, BAC, WM one cut at a time.

  2. It amazes me to see gains like those occuring today , and still see momentum dropping as the rise occurs . Hi Lo index for the NYSE still in the sewer , stocks over 100 200 dma falling yet , not to mention the volatile ones around the 20 and 50dma . I see we are in a confirmed downtrend on most indices . Good enough for me . Folk can have the AbuDhabi put today , market was more pleased with it than the Feds promise of cash infusion yesterday . Citigroup on the way out I think – I don’t trust Arab money , and I don’t trust banks .

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