Dr. Wish

The GMI held to 6 Tuesday–barely.  Another down day in the QQQQ will reduce the GMI at least one point.  Note there were only 126 new 52 week highs in my universe of 4,000 stocks.  Only 46% of the 514 stocks that hit a new high 10 days ago closed higher on Tuesday than they did 10 days earlier.  Failure of new highs to hold up is a sign of market weakness.  Only 37% of the Nasdaq 100 stocks advanced, along with 57-60% of the S&P 500 and Dow 30  stocks.  The Nasdaq 100 stocks are clearly lagging.  Only 49% of them closed above their 30 day averages, the lowest percentage since this rally began in mid-August, and well down from a peak of 88% reached in October.  The IBD 100 list from 12/18 did better on Tuesday, 54% of them advanced and 72% remain above their 30 day averages. RIMM fell on Tuesday, but GOOG and AAPL bounced…….

I am sorry, but I don’t like this market and I have told you I am a chicken.  It has been 17 days since the QQQQ hit a recovery high, the longest such stretch since this up-turn began in mid-August.  Tuesday was the 86th day of the current up-trend in the QQQQ.  The MACD for the QQQQ continues to decline.  I am out of all of my longs, and holding a small pilot position in the QID.  QID will rise if the QQQQ declines. Meanwhile, I will earn 5% interest in a money market fund as I wait for a clear trend.

The GMI is still 6, but the GMI-S fell 18, to 63.  The short term indicators for the small cap stocks (IJR) are almost all negative.  Only the Dow 30 stocks are holding up (DIA).  Only 24% of the Nasdaq 100 stocks advanced on Monday, along with 31% of the S&P 500 stocks and 57% of the Dow 30 stocks.  Even the stocks on the new IBD 100 list published on Monday were weak; 26% advanced, though 17 hit a new high during the day.

When I see the market leaders weaken, GOOG (-3.6%) and AAPL (-2.6%), I become concerned about the market trend.  Yes, the GMI is at a maximum 6, but it would not take much more of a decline in the QQQQ to cause it to rapidly weaken.  Let’s not try to anticipate the market, however.  We can wait for a definite sell signal to take action.  Just remember, this market has been in a strong up-trend for 85 days. The 10 day average has closed above its 30 day average every day since 8/16 when the rally began.  During the huge rally in the QQQQ that began in March, 2003 after the 2002 bottom, the 10 day average closed above its 30 day average for 103 days. I have to suspect that we are not far from at least a temporary pause in this up-trend.

The GMI is still 6.  59% of the Nasdaq 100 stocks rose on Friday, along with 46% of the S&P 500 stocks and 60% of the Dow 30 stocks.  There were 346 new 52 week highs in my universe of 4,000 stocks. 68% of the Nasdaq 100 stocks closed above their 30 day averages, still below the peak of 79% last November 16 and 88% on October 16.  Friday was the 84th day in the current QQQQ up-trend.

I added to my IBD 100 performance table the new IBD 100 list published today.  44% of the stocks on the list from 12/18 rose on Friday and 18 of them hit a new 52 week high.  88% of the stocks on the new list closed above their 30 day averages, substantially better than the other IBD 100 lists in the table. With the exception of the stocks on the list published on 5/16,  the majority  of the IBD 100 stocks closed higher than they did on the date their list was published.   In contrast, more of the stocks in the Nasdaq 100 index (59) advanced on Friday.