General Market Index (GMI) table

GMI flashes “Sell”

@ 7:00 am
GMI2/6
GMI-21/9
T210852%

With the GMI having registered less than 3 for two consecutive days, it has now flashed a Sell signal.   Friday was also the second day of the new QQQ short term down-trend.  I am in cash in my IRA and margin accounts.   I want to see what happens with the resolution of the fiscal cliff negotiations before I re-renter the market. Because of the limitations on trading, I am still 100% invested in mutual funds in my university pension–for now. Only two of the four oversold market indicators I watch are oversold, indicating this market could fall further. One of them, the Worden T2108 indicator, is at 52%, in neutral territory.

Critical week to come; QQQ on support

@ 7:06 pm
GMI5/6
GMI-23/9
T210865%

With the GMI at 5 and still on a buy signal, I would like to remain somewhat bullish. I do not like to pay attention to the news or politics when assessing the market trend.   However, we all know that this fiscal cliff hysteria could cause some huge moves between now and New Years. The drop in the QQQ on Friday was large and sudden and formed a gap below Thursday’s range.   Friday was the 19th day of the current QQQ short term up-trend.   But the up-trend is in jeopardy.   This daily chart of the QQQ   shows some key characteristics. Arrow 1 shows that on Friday the QQQ came close to the bottom of the Bollinger Band range that I follow (15,2) and bounced up off of the critical 30 day moving average (red line). The 30 day average is now rising, an important sign. The gray background highlights the range of the Bollinger Band. Arrow 2 shows the top of the Bollinger Band range where I would suspect any rise might meet resistance.   Note that 3 recent rises have stopped at the upper Bollinger Band (BB). Any rise in the QQQ this week will likely meet resistance around 66.60.   If the QQQ instead falls through the 30 day average and the lower BB, I would suspect a major decline and begin to exit my long positions. The QQQ is therefore facing a critical test of its short term up-trend.

The GMI remains at 5, but the more sensitive GMI-2 is at 3, reflecting weakness. The technically much stronger SPY has closed above its critical 10 week average for 4 weeks, but the QQQ has just crossed above its 10 week average. The Worden T2108, at 65%, is in neutral territory. 67% of the Nasdaq 100 stocks closed with their MACD above its signal line, a measure of short term strength. Extreme caution is called for.

 

GMI back to 6; 4th day of QQQ short term up-trend; holding FB; I bonds for savings

@ 10:43 pm
GMI6/6
GMI-24/9
T210857%

It is never a good idea to fight the trend of the general market.   With the GMI flashing a recent Buy signal and the QQQ short term up-trend likely to reach its 5th day on Monday, it is time for me to accumulate TQQQ. I also own some FB, which I will hold long term. FB rose 16% last week on relatively high trading volume.   The QQQ and SPY have now closed back above their 10 week averages, a good sign of strength.   I have a much better chance of making money on the long side when this is the case.

Speaking of making money, I wanted to remind my readers to look into government I bonds.   These U.S. savings bonds are paying 1.76% and are a great way to earn more interest than one can get on a CD.   I bonds have their interest rate adjusted each 6 months in accordance with the CPI-U.   Therefore, unlike CD’s, the interest paid climbs if interest rates should rise.   There are a number of rules regarding I bonds and one should read them carefully.   For money being saved for 1 or more years, they represent a terrific option to me.