Month: June 2010

Market closes strong–bounce? RDY

@ 7:00 am
GMI0/6
GMI-R0/10
T210816%

While the market closed strong on Tuesday, it has a long way to go to change to an up-trend.   Every bounce must be met with skepticism until it proves itself. I remain in cash, GLD and short in my IRA.   (I have not yet moved from mutual funds to the money market fund in my university pension, however, primarily because of limits they have on trading to time the market.)

By the way, a stock that hit another new all-time high on Tuesday is RDY, a drug manufacturer in India.   This   stock should be added to our watch list for possible purchase when the market trend turns up.

23rd Day of QQQQ Short Term Down-trend; To hold stocks is insane

@ 7:00 am
GMI0/6
GMI-R0/10
T210815%

My account rose again on Monday as my positions in GLD and   short index ETF’s   gained.   Again, people have been misled down the buy and hold path, only to see their assets evaporate.   People just do not understand that it is fine to be out of the market during rough times.   Most have been scared into the market by the pundits who say that the market always comes back or that they might be hurt by missing the best market days if they are in cash. That is so much rubbish!   One can always renter the market after a new up-trend has begun.   Real up-trends last for months, if not years.   Monday was the 23rd day of the current short term down-trend.   During that time, the Nasdaq 100 index has declined 8% and 92% of its component stocks have declined.   In the same time period, 93% of the S&P500 stocks also declined. Why would anyone try to hold stocks during a down-trend, hoping that his/her stocks would rise?

What is copper telling us about the world economy? In GLD, short, and in cash

@ 7:00 am
GMI0/6
GMI-R0/10
T210819%

So many of the indicators and stocks I look at are looking very weak.   A lot of people say that copper prices are correlated with economic growth.   Copper is a key material in so many products related to building and economic development. While looking at my watchlist of indicators, I happened to see this weekly chart of copper.   By my analysis, copper looks like it is getting ready to enter a major Stage 4 (See Weinstein book below for a discussion of stage analysis) down-trend.   I can’t trade futures in my IRA account and I can’t short stocks.   But I could buy some put options on SCCO, whose chart tracks the price of copper quite closely. Regardless, I think that this chart of copper is an ominous sign for the world’s economy…..

Another ominous sign is that the GMI and GMI-R   are each at zero.   The markets are in short and longer term down-trends and it makes no sense to hold stocks or long positions now, except for gold (GLD).   So I am short a few index ETF’s and own GLD. I do not know how long this decline will last, but things do not look good right now.   Friday was the 22nd day of the current QQQQ short term down-trend.   The Worden T2108 is at 19%, which is in oversold territory but not at an extreme level.   One promising sign is that 54% of the Nasdaq 100 stocks had their MACD above their signal line, a sign of short term strength.

Anyone hanging on to long positions probably has an addiction to trading or gamboling.   One needs to have a plan to minimize market risk.   It is so much easier to make money owning stocks when the GMI is above 3.