Month: January 2015

GMI Sell signal remains in place; very cautious as bonds march higher

@ 8:14 pm
GMI2/6
GMI-24/9
T210846%

My indicators weakened on Friday and so the GMI Sell signal remains in place.   My more sensitive measure of the short term trend of the QQQ also remains down, now having reached 6 days.   I am holding mainly biotech stocks which have been miraculously bucking any market weakness, some SQQQ as a hedge,   and a lot of cash in my trading accounts.   I am about 40% cash in my more conservative university pension accounts. I am very cautious now. The market will become very volatile now as 4th quarter earnings are released and everyone focuses mainly on estimating the   impact of lower oil prices on the future profits of many companies.

Meanwhile interest rates continue to drop as government bonds strengthen.   Note that   TLT (20 yr treasury bond ETF) broke above the possible double top I wrote about around December 23rd. Check out this daily chart that I have now updated. I guess the entire world is seeking the relative safety and better yield of U.S. long term bonds! This pattern looks like a powerful cup and handle break-out. Bonds will probably continue to be bid up until the eventual bubble bursts!

TLTdaily01102015

Here are the GMI stats. Note that SPY has now closed below its critical 10 week average.

I will be unable to post on Monday night, as I will be far from my computer and my statistical software. I will post again Tuesday night.

GMI01092015

Day 5 of $QQQ short term down-trend; GMI to turn again?

@ 8:53 pm
GMI4/6
GMI-25/9
T210849%

IBD has called the market back in an up-trend. Another up day could turn the GMI to a Buy signal. I have rarely seen such volatility. I did say that more than one half of QQQ short term down-trends have lasted under 10 days. This daily chart shows the recent GMI signals (by the arrows).

DailyQQQ01082014I remain a little skeptical of whether this bounce will hold.

4th day of $QQQ short term down-trend; selling cash secured puts

@ 9:51 pm
GMI2/6
GMI-21/9
T210840%

Perhaps one of the best teachers of option strategies is Alan Ellman.   He has specialized in teaching people to sell covered calls, a conservative relatively low risk option strategy. Alan just published a new book on selling cash secured puts. This technique can be used to generate income or to buy a stock at a price lower than it is currently selling at. This technique is very similar in risk profile to selling covered call options. I have used this technique in my IRA. This is the best book I have read on the subject. I have added it to the list to the right of this post. If you purchase it through this link, my webmaster son might earn something to repay him for all of the support he freely gives me on this site.