Month: January 2011

The GMI and GMI-R declined on Thursday.   There were only 49 new 52 week highs in my universe of 4,000 stocks.   There were 13 new lows, most of which were municipal bond ETF’s.   One important indicator of a market’s internal strength is the action of the leaders.   On Thursday, 8 of nine stocks in my leaders list declined, 7 of them fell more than 1%.   AAPL has failed to hold at a new high after its earnings were released.   (Blame it on Jobs??) On Friday, we get to look at how GOOG reacts to its great earnings.   IF GOOG cannot hit a new high and stay there, it will be another ominous sign for the tech stocks.   If the best stocks cannot lead the way higher, how can we expect the rest of the troops to gain?

I know that the GMI and GMI-R are still at their maximum levels and I should keep my long positions.   But the   technicals of the municipal bond ETF’s I reviewed earlier this week are so weak that I am acting to protect my gains achieved over the past few months.   I have sold out most of my long positions in my trading IRA and bought some calls on TYP, in case the tech stocks break down.   I am also considering buying puts on AGO, an insurer of municipal bonds. If I am wrong and the market continues to climb, I will get back in. I do not have to be fully invested all of the time. The huge deficits of the states and local governments scare me.

I reduced exposure to stocks yesterday.   I am watching MUB, one of the few municipal bond ETF’s which trades options.       Muni ETF’s bounced on Tuesday. May buy some puts after the bounce.