One must not argue with the market. It peaked long before the bad news came out and it has bottomed before a lot of good news has come out. As a Maryland state employee, I am learning that we will lose 8-10 days of pay over the next 12 months. I know MD is not the only state facing huge budget deficits, so I am incredulous how the market can act like things are betting better. So many employees are looking at slimmer paychecks. Given that a few months ago we feared that the economy was going to collapse, maybe the fact that it hasn’t has precipitated a relief rally. The patient remains in the ICU, but apparently will survive. As my GMI table below shows,
the GMI remains at a strong 5 out of 6. With readings consistently at 4 or above, I must remain long in this market. I tune out the media pundits and try to concentrate on my indicators. If 100 stocks in my universe of 4,000 hit a new high on Monday (90 did on Friday) the GMI will register 6. Note that 71% of the Nasdaq 100 stocks closed with their MACD above their signal lines, a show of strength. The T2108 remains at a high level (86%) but can remain there for weeks. The QQQQ and SPY have closed above their important 10 week averages for seven straight weeks. It is in periods like this that I can make money trading on the long side. I am mainly in QLD and a small number of growth stocks.