Month: March 2012

GMI declined to 5 (of 6) and the T2108 is back to 49%.   There were less than 100 new highs on Thursday. I still suspect that this decline will lead to a nice rebound into the close of the first quarter next week.   But it is important not to become attached to a made up scenario.   I remain long, except for gold,   and will have to wait for the near term resolution.   If we do get a bounce up next week, chances are we will see weakness the following 5-10 days as we wait for first quarter earnings to be released. The earnings releases will then set the market tone for the next month. While we have had as long as 80+ days of a short term QQQ up-trend before, they are relatively rare.   So this up-trend may be closer to the end than I suspect.

End of first quarter on the horizon.   The strongest stocks should become stronger into next week.

The GMI dropped to 5 because the Successful 10 Day New High component of the GMI turned negative.   As long as the GMI remains above 3, I have no concerns about the current up-trend.   Furthermore, next week is the end of the first quarter, and mutual funds will be buying up the strongest stocks so they will appear in their quarterly reports.   The reports don’t specify when the stocks were bought, so every portfolio manager can appear to have bought the winners before they rose.   So, I believe that any weakness in the winners is setting up a major rise at the end of the week into next week.   AAPL and the other leaders should gather strength. I am fully invested on the long side and will ride this up-trend until it ends.

Meanwhile, gold appears weak to me.   I own put options on GLD because I think gold is at the beginning of a major Stage 4 decline. Check out this weekly chart of GLD.