For the first time in months, I moved some of my most conservative university pension money back into a mutual fund from a money market fund. The GMI is now 6 (of 6) and there were 182 new 52 week highs on Thursday, the most since the end of November, 2015. All major indexes have reclaimed their critical 30 week averages. Remember when the market bottomed in 2009 and started back up? No one believed that a bottom was in. The market is always looking forward and we humans are always looking backward. The reasons why the market is moving up will eventually come out and then everyone will begin to feel safe and pile back into the market again— until it eventually tops. I will re-enter the market slowly as long as the upward trend continues. If it fails, I will exit again.
The Worden T2108 indicator again called the bottom, in late January, with an extremely oversold reading of 3.8% a low level only surpassed by the bottoms in 1987 and 2008. Again, I promise that the next time the T2108 goes into single digits I will buy an index ETF. But I know I will be too scared . Whatever causes most people to dump stocks requires a new fear–it has to be to create the huge sell-off. The T2108 is now at 86%, a very high level, but one to be expected when stocks bounce back from a significant decline. The T2108 index measures the percentage of NYSE stocks that closed above their average closing price over the past 40 days. I show T2108 each post and it is also available with the Worden software . Just enter T2108 as a stock symbol.
There are so many stocks breaking out to all-time highs. I set up TC2000 to alert me the instant that a stock trades above a green line top (green line break-out, GLB) that I have drawn. On Thursday, I received an alert on EDU when it hit 34.34. Below is the alert and chart that was produced real time by TC2000.
Of course this chart now shows the entire day’s price bar (EDU closed at 35.99) but the little blue circle shows where the stock was when the alert was signaled. When the alert came, I was on my computer. I had researched EDU before and liked the technical set-up and bought some. Here is the full weekly chart on EDU. It looks like a large cup and handle break-out? But the volume on Thursday was only a little above its 50 day average trading volume.
I am showing you this example, not because I think EDU is a buy now, but to illustrate how I use the TC2000 alert system. I have been using this great software for over 25 years.
Another GLB stock I have bought is TSE. TSE closed above its green line, retested it, and then resumed its advance.
If I buy a GLB, I always sell if the stock closes back below its green line. Look what happened to ISRG after its failed GLB. A stock that breaks above a multi-month top to an all-time high should do so on unusually high volume and keep rising or at least hold the break-out point.
Other recent GLB stocks I am following or own include: UFPI, EBIX, AVGO, FICO, KO, TXRH, FISV and DOC. These are to be researched, not instantly bought. One must use his/her own set-up for buying and managing risk. This is what I teach my undergraduate students at the university.