GMI: +6; IBD Meetup indicator bullish; I won’t fight the tape but will watch out for May

Well, I missed a post and the Wish contrary indicator still works.  If I am so tired/frustrated that I do not post, it usually marks a short term bottom.  Fortunately, I still had some long holdings along with my puts on housing stocks, which recovered on Wednesday.  So, did any of my indicators give us a hint of a bottom?  On Monday I wrote that only 30% of stocks were in a short term up trend, the least since March 10  (27%).  What I did not notice was that March 10 was the bottom of the decline in the QQQQ (@ 40.19) in March.  So the next time we see this indicator around 30% we should be looking for a short term bounce OR a serious decline. History rarely repeats itself exactly in the market.

Tonight was IBD Meet-up night.  For the first time, no one but I attended.  In prior months, when people were so demoralized that few attended the monthly meeting, it represented a good time to buy.  So tonight’s action may represent a screaming buy signal.  Perhaps people have been so whipsawed by this market that the 200 point rise on Tuesday merely shoved car loads of salt into everyones’ psychic wounds.

My indicators have bounced back with the GMI now at the maximum reading of +6.  Gmi0419 The GMI-L is now at 100 and the GMI-S at 88.  39% of stocks are now in a short term up trend.  The QQQQ is the strongest index right now.  The QQQQ is now in its 16th day of its short term up trend.  There were 554 new highs in my universe of 4,000 stocks on Wednesday.  An amazing 38% of stocks are now within 5% of their 52 week highs. 67% of stocks closed above their 10 week averages…..

I know it seems insane that the market would rise with $72 oil and rocketing gold prices.  But we know that when the market wants to move one must jump on board or get out of the way.  The failure of the housing stocks to hold their gains on Wednesday is an ominous sign and suggests that that sector just had a short covering rally on Tuesday, and not a real bottom.  When the euphoria over current earnings dissipates, we might see these stocks and others come crashing down.  Beware the Ides of May………..

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GMI: +4; GMI-S: 25; lightening up on longs

The GMI is at +4.  While there were more than 100 new highs in my universe of 4,000 stocks, there were few successful 10 day new highs (stocks that hit a new high ten days ago and closed higher on the Monday than they did ten days earlier).  Failed new highs are a warning sign of a weak market.  Gmi0417 Only 22% of the Nasdaq 100 stocks rose, along with 35% of the S&P 500 stocks and 17% of the Dow 30 stocks.  Only 30% of stocks are in a short term up trend, the lowest since March 10.  Only 49% of stocks closed above their 10 week averages.  The GMI-S fell to 25, indicating considerable weakness in my short term market indicators.  None of the four short term indicators for the DIA are positive.  Monday was the fourteenth day (U-14) in the current short term up trend in the QQQQ…….

I am starting to lighten up on my longs.  A few more days down will turn my indicators decidedly negative. 

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GMI: +4; Housing and utilities weak; in May–go away!

Gmi0413 Last week ended with the GMI still at +4.  Between 59-66% of the stocks in the Nasdaq 100, S&P 500 and Dow 30 indexes rose, but there were only 79 new yearly highs in my universe of 4,000 stocks.  Only 32% of stocks are in a short term up trend.  The QQQQ is in the thirteenth day of a short term up trend (U-13).  With long term interest rates rising, the utilities and housing stocks have been on a steady decline.  Shorting them has yielded easy profits. (No pun intended!)  With May rapidly approaching, it is time to watch for the customary seasonal top after earnings are out.  In May, go away…