Longer term averages survive retest; Going long


The major indexes all held at their 30 week averages and the QQQQ is in a strong Stage 2 advance.   There were 43 new highs in my universe of 4,000 stocks on Wednesday, the most since September 19th.   There were only 6 new lows.   The GMI is at 5 for the first time since April 24, and the T2108 indicator rebounded to 65%.   I wrote earlier this week that the market was in a short term down-trend within a longer term up-trend.   Well, it looks like the indexes found support at their 30 week averages and the short term down-trend has ended.   The QQQQ is back above its key 10 week average. I am going long in my trading account and transferring more funds from money market to growth mutual funds in my university pension.   It looks to me like we are at the beginning of a Stage 2 advance with the 30 week averages having successfully turned up.   See Weinstein’s book, to the lower right, for an explanation of stage analysis, my primary method for determining the market’s major longer term trend. Among the stocks at new 52 week highs on Wednesday that are close to their all-time highs are:   LL, AIXG, MVL, ORLY, ROST.   Any stock that can come through the past year’s market decline and be trading near its all-time high is a potential market leader that should be watched. I own ROST.

4 thoughts on “Longer term averages survive retest; Going long”

  1. Wish,

    What are you using to time entries into individual stocks? the MACD? Stochastics? And are you waiting for pullbacks at least to the 10 week MA until you enter all your positions? I find that I’m buying a lot of my stocks (and options..) over extended


  2. Professor, are you at all concerned about a bear trap? This is options expiration week and usually not a good predictor of things to come.

  3. I look at a several technical indicators, including MACD and stochastics. The biggest problem for my students is they buy stocks that are “extended” from support and then sell out when they fall back to support. The key for me is to buy a stock in an up-trend that has just bounced up off of support and to place an immediate stop loss order right below the low of the bounce. My preferred indicators for identifying support are the 30 day and 10 week simple moving averages. I use TC2007 to scan the market to find stocks that are bouncing off of these moving averages. In order to make a purchase the market indexes and the stock must be in a Stage 2 up-trend and the monthly chart should also show a confirmed up-trend.It is very important for me to review the daily, weekly and monthly charts.

    As to whether this is a bear market trap, time will tell. One can never know how long a trend will last.

  4. Between July 13 and 15 you seem to have whipsawed in your market analysis . With Goldman STILL driving the volume on the NYSE – 40% of stocks mentioned in your piece . I would be very leery and extremely cautious . Would rather miss a move , especially in current economic environ , than risk losses due to RAMPANT and unchecked market manipulation by Banks that have received huge bailout monies , and reporting earnings off of that via cooked books . This is a fools market imho .

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