Dr. Wish

The GMI is at the maximum of 6 and the GMI-S now registers 81.  All four short term indicators for the SPY are now positive.   There were 554 new yearly highs in my universe of 4,000 stocks, the most since April 19 (also 554), before the QQQQ began its decline that ended in July.  At the bottom in July my Bullish Trend indicator bottomed out at 28% and has been steadily rising to its current new high of 71%.  Curiously, only 49% of the Nasdaq 100 stocks rose on Tuesday, compared with 60-64% of the S&P 500 and Dow 30 stocks.  67% of the IBD 100 stocks from 11/20 rose and 26 of them hit a new high.  So the IBD 100 type growth stocks outperformed these other stocks yesterday. Tuesday was the 76th day of the current QQQQ up-trend.

I know I should stop trying to anticipate market turns.  But with some indicators at peaks,  some leaders refusing to hit new highs (AAPL, GOOG, RIMM), and with the knowledge that market tops occurred in the Dec/Jan period the past few years, I am lightening up on my longs.  Of course I will wait for a real sell signal in the GMI to take larger short positions….

The GMI is still 6. But only 25-35% of the stocks in the  Nasdaq 100, S&P 500 and Dow 30 indexes rose on Friday.  There were 238 new 52 week highs in my universe of 4,000 stocks. Friday was the 74th day of the current QQQQ up-trend.  While the GMI remains at 6, I am concerned by the weakening in the GMI-S indicators. For the first time since this up-trend began, the QQQQ has closed 5 consecutive days below its 10 day average, which itself is curving down.  The leaders are also weakening.  GOOG closed below its 30 day average for the first time since last August.  (I had already sold my GOOG.)  AAPL has also stalled for now, although it remains in an up-trend. I therefore lightened up a little on the QLD and bought some QID.  I am hedged a little on the direction of the QQQQ and will wait to see which trend unfolds.

The IBD  100 stocks have been holding up okay.  The best list in this table, the one from 11/20, had 13 new highs on Friday, compared with the Nasdaq 100 stocks that had only 2 new highs.  Note, however, that only 53% of the IBD 100 stocks from 11/20 closed higher on Friday than they did on 11/20.  Still, 77% closed above their average price for the past 30 days, compared with 58% of the Nasdaq 100 stocks.