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GMI: 6; fly by gut or instrument?

@ 12:01 pm

The GMI is still 6, but I am troubled by a few things.  First, there were more new 52 week lows than highs in my universe of 4,000 stocks on Friday, 161 vs. 134.  The number of new lows was the highest since 163 on August 10, 2006, when the summer market decline bottomed out.  The new low list is filled with banks, REITs, builders and financials.  During a bull market, stocks like LEH and MER  and GS and SCHW should be soaring, not in a free-fall. The Worden T2108 indicator is now at 44, down from a rebound to 55 from 34 about three weeks ago.  Finally, weakness in GOOG after its earnings were released on Friday was the first big crack among the market leaders. So, will AAPL when it releases its earnings on Wednesday follow the lead of ISRG and RIMM, or that of GOOG?  A collapse in AAPL would signal to me that the up-trend is almost over.  Jesse Livermore cautioned that when people stop bidding up the leaders, then they soon stop paying up for the other stocks and the market tops…..

Thus, while the market trend remains up, I am content to stay largely in cash this week; most of my shares were called away on Saturday.  There will be plenty of time to take on new covered call positions if stocks hold support this week.  I am too cautious to fly mainly on instruments (my indicators) this week and prefer to listen to my nervous gut.

See my disclaimers on a prior post.

GMI still 6; waiting on options expiration

@ 12:01 am

The GMI is still 6.  However, there were more new lows (159) on Wednesday than I have seen since last March when the Februrary rout ended.  Still, there were also 138 new highs in my universe of 4,000 stocks.  All up-trends I follow are still in place.  The Worden T2108 indicator fell a little, to 49.5; markets get toppy around 80.  The market pendulum is right in the middle between the bull/bear extremes.  On Saturday, most of my stocks will be called away and I will be back in cash and ready to write new August calls.  In addition, I am still long GRMN, FTO and AAPL, and short OMX.  Many oil stocks bounced off of support on Wednesday…

See my disclaimers on my prior post.

GMI: 6; All indicators positive; T2108 only 55; OMX weak

@ 10:00 pm

The GMI has been at a maximum 6 since July 3.  (Note :  I mainly post when the GMI changes.)  The GMI has been 4 or above since March 20.   If I had merely bought and held the Ultra QQQQ ETF, QLD, since then, my portfolio would have increased by about 24%.  It’s that easy–just catch the trend and ride it until it ends.   Gmi0713 Of course, I did not do this, but I have done well during this time writing covered calls, and riding AAPL and GRMN and FTO, all of which I wrote about.  In fact, I would say that if one has not made money during this rally, s/he should just stop trading and invest in a mutual fund or the SPY. The market provides brutal feedback, one knows the score by whether s/he makes or loses money.

The T2108 is 55%, so this rally probably is a long way from the toppy 80’s. However, the QQQQ has closed above its 10 week average for 16 weeks. A close of this index below its 10 week average, currently 47.53,  would be a sign of weakness and a signal that the up-trend is weakening.  Meanwhile, I will not fight the tape, although I could not resist buying some puts on OMX, which is in a steady downtrend. Holding a short on one very weak stock will enable me to make money when this strong market starts to correct.

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