Too many times I have seen the market plunge after a Stage 4 decline became evident. It is therefore possible that we have only seen the beginning of a major decline. No one knows when a decline will end. So for me it makes sense to be in cash and to wait for a clear Stage 2 up-trend to develop. I have been trading/investing since 1964 and have seen many major declines. I wrote last November that I was exiting the markets. There is plenty of time to make $$$ when my GMI (see table) turns Green again…..
Here is the weekly chart of QQQ. Note the failed attempt to retake the 30 week average (solid red line). Note the prior Stage 2 up-trend (closes above a rising 30 week average) when it was easy to make money trading on the long side. I tell my students if they are only long stocks and/or the market index ETFs when they are in Stage 2 up-trends they should do fine. The Worden T2108 indicator is at 39% (see table). Bottoms of declines typically occur when T2108 reaches single digits. We are a long way from that. Don’t fight the tide.