Month: January 2015

3rd day of $QQQ short term down-trend; $NPSP shines; GMI signals Sell

@ 8:54 pm
GMI2/6
GMI-20/9
T210834%

In spite of the decline on Tuesday, it was surprising to see that there were 171 new highs. So I looked at where they were. I was amazed to find that one half of the new highs were REITs! Could it be because REITs tend to pay more yield or is it that people are afraid of stocks and moving toward real estate?   Any ideas?

Biotechs continue to outperform and many have been rising in this declining market. I noticed that NPSP had a high volume green line break-out to an all time high on Tuesday. Check out its weekly chart. There is chatter about a takeover. Any stock that can come through this market at an all time high has something going for it.

NPSP01062014

With the GMI below 3 (at 2) for a second day, it now signals Sell.   I am hedged and not looking for long positions now. The GMI has done a great job   getting me out of declining markets.

2nd day of new $QQQ short term down-trend; $T2108 suggests more room to decline

@ 10:09 pm
GMI2/6
GMI-20/9
T210839%

I looked back at the length of QQQ short term down-trends since 2006. About 40% have lasted 5 or fewer days and another 16% lasted 6-10 days.   So there is about a 50/50 chance this short term down-trend could end within 2 weeks. However, one more weak or flat day and the GMI will flash a new Sell signal. GMI sell signals are more significant and can indicate a longer term down-trend. Note the GMI-2 is now 0 and the T2108 has fallen to 39%.   I start looking for a bottom when T2108 is below 20%. This weekly chart puts T2108 in context. It still has a long way to fall.

T2108weekly01022015

Market at crossroad; $AAPL –time to exit?

@ 8:18 pm
GMI3/6
GMI-23/9
T210851%

It is noteworthy that the IBD market pulse claims the market up-trend to be under pressure. My GMI is now 3, indicating a market trend that is midway between up-trend and down-trend.   Nevertheless, with my QQQ short term trend count now turning down, I am taking money off of the table. My university pension assets are double what they were at the 2009 bottom and I am unwilling to give much of it back.     I have transferred about half of my mutual funds to money market funds. I will sleep better knowing that I have protected money that I will need for retirement. (I am a chicken!)

I am hedged, long and short in my trading IRA, however. I own inverse ETF, SQQQ, which is designed to rise 3X the amount that QQQ falls. If the QQQ short term down-trend ends quickly, I will exit my position in SQQQ.   There are other storm clouds on the horizon. The QQQ has now closed below its critical 10 week moving average. In the past I have found it very difficult to make money on the long side when this was so. The fact   that the IBD Mutual Fund Index is also below its 50 day average (a component included in the GMI, see below) suggests to me that the pros who invest   in growth stocks are   having trouble…..

A lot of people are married to AAPL. It is the one stock that people seem to think is safe. Over the years I have found that as long as AAPL closes above its 10 week average it is   profitable to hold. Growth stocks should remain above their rising 10 week averages. I tend to get into AAPL when it closes above its 10 week average and to exit when it closes below. Well, AAPL has now closed the week below its 10 week average. The weekly chart below clearly illustrates this. AAPL may quickly regain its 10 week average as it did last October, and then again   it may not…..

AAPLwkly01022015

AAPL has a lot of company below the 10 week average:   TSLA, GOOG, AMZN, BABA, NFLX, PCLN, GMCR to name a few.   They typically shoot the leaders first.

The GMI remains at 3 (of 6). Two consecutive daily closes below 3 would trigger a GMI Sell signal. Note that the SPY remains above its 10 week average–for now.

GMI01022015