General Market Index (GMI) table

39th day of QQQ short term down-trend; ASPS break-out?

@ 6:00 am
GMI1/6
GMI-23/9
T210829%

The GMI is at 1 and the GMI2 is at 3.   While the short term trend of the QQQ is still down, its longer term trend is up.   Still, the GMI sell signal from early May remains in effect. The QQQ and SPY have each closed below their 10 week averages for 6 weeks.   I cannot consistently make money trading on the long side when these indexes are below their 10 week averages. The Worden T2108 is in neutral territory, at 29%.   Interestingly, 72% of the Nasdaq 100 stocks closed Friday with their MACD above its signal line, a sign of short term strength….

Only 98 stocks out of almost 6,000 hit a 52 week high on Friday.   It is in the new high list that I look for the leaders of the next move up. Any stock that can reach a new high, and especially an all-time high, during protracted market weakness is likely to be reflecting some serious buying pressure. One stock that did so last week is ASPS.   I wrote about ASPS last November when I thought it was breaking out of a   a cup-with-handle base.   At that time ASPS was trading at $43.50.   ASPS has continued to rise and hit a new high last week, closing near $65.   I have found that weekly charts are quite good for identifying break-outs from multi-week bases.   The weekly chart of ASPS below shows green horizontal lines which mark the tops of bases. Note the base last November when I first wrote about ASPS.   Another base formed around the end of 2011.   It looks like a new base that began in March has just been penetrated.   ASPS rose 12% last week. I have no idea if   this break-out will survive the current market gyrations, but I could not resist taking a small position in ASPS last week.   I will only add to my position at higher prices, after it confirms a continuing up-trend.   I have already researched ASPS and have found that the stock meets my technical and fundamental criteria for a growth stock.   The fact that the break-out last week was accompanied with the highest weekly volume in 13 weeks is another promising sign.   The stock has also recently found support at its 30 week average (red line) as it did in 2011. I will watch ASPS carefully…….

Is the market near a bottom?

@ 6:00 am
GMI0/6
GMI-20/9
T210819%

I am posting a monthly chart below of the Worden T2108 Indicator, which is available from its inception, in September, 1986.   This indicator is available in the Worden products (TC2000 and freestockcharts.com) and serves as a pendulum of the market, ranging from extremely overbought to oversold.   T2108 measures the percentage of NYSE stocks that closed above their simple 40 day moving average of price.   While it cannot call a top or bottom, the more extreme it becomes, the greater the likelihood that the market is near a top (>80%) or bottom (<10%).   (I did not get to post the intended T2108 video on Sunday, as indicated.)   Current T2108 reading of almost 19% is not yet at a very extreme level. If T2108 gets into single digits, I will look to slowly buy an index ETF. Stay tuned…..

Meanwhile, all of my GMI and GMI2 components are negative. Friday was the 34th day since I called a QQQ short term down-trend.   Both the QQQ and SPY closed Friday below their critical 10 week averages. Only 37% of the Nasdaq 100 stocks closed with their MACD above it signal line, a sign of short term weakness. While we may get some follow-through weakness on Monday, it is noteworthy that 3   of the 4 indicators that I track to detect an extremely oversold market are now oversold.   The put/call ratio is at 1.18, and is in the vicinity of   the high level of   bearishness among options traders which typically precedes a market bounce, at least for a day or so.

This market is currently in a short and longer term down-trend. No one can know for sure in advance   when it will end.   I am 100% in cash in my margin account, mainly in cash in my trading IRA, but   invested 100% in mutual funds in my university pension where I am not permitted to trade often.   I may take some money out of the mutual funds, however,   when we get a bounce and I always continue investing new allocations in the funds each pay period.   Dollar cost averaging into mutual funds during a decline is a good idea for me, because the general market will eventually come back. I never buy individual stocks on the way   down because some (e.g., ENRN, GM) might never come back.

30th day of QQQ short term down-trend

@ 6:00 am
GMI1/6
GMI-20/9
T210826%

I had hoped to produce a new video this weekend but was unable to get to it.   Thank you for all of your nice comments.   If you missed my video on “sell in May”, please go to last Monday’s post and select the link. The GMI remains at 1 and the GMI2 is at zero. It remains to be seen how long this bounce from oversold levels will last.   I remain largely in cash in my trading accounts.