General Market Index (GMI) table

Jim Cramer finds (TA) religion; TSYS: cup with handle breakout? Indexes are weak, but some promising IBD100 stocks appear

@ 9:39 am
GMI1/6
GMI-R4/10
T210840%

I know that the GMI has kept me and, I hope others, out of the long side of this market since at least August 2008, the last time that the GMI was 4.   I prefer the GMI to be at least 4 before I commit many IRA funds, and especially my university pension,   to the long side.   Since the GMI fell below 4 in late August, the QQQQ (Nasdaq100) and SPY(S&P 500) have declined 35%, and the DIA (Dow 30), by 31%.   During that same time period, 95% of the Nasdaq 100 stocks declined, 36% have declined more than 40%.   The biggest losers in the Nasdaq100 component stocks includes such well respected stocks as: RIMM, ISRG, and DELL (each down 63%), and JOYG (-69%)   and WYNN (-72%). As to   the “safe, buy and hold” Dow 30 stocks; 100% declined in this period, with whopping declines in: AXP (-58%), GE (-60%), GM (-75%), AA (-76%), C (-80%) and BAC (-81%).   Do you see why it does not make sense to fight the general market’s trend, as reflected in the GMI!

Speaking of the GMI, the table below shows

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The new 3x ETF’s–triple your pleasure — or pain

@ 3:59 pm
GMI2/6
GMI-R5/10
T210858%

As you know, when I try to trade the trend of the QQQQ, I buy QLD (ultra long) or QID (ultra short) ETF’s.   These ultra   ETF’s are designed to move twice as much as the underlying index they track.   Well, less well known is that there now exist 3x ETF’s, designed to move three times as much as the underlying index. I knew about the recent emergence of these Direxion ETF’s, but was surprised to see how quickly they have caught on.   I have now located 16 of them, and 8 of them traded more than one million   shares each on the NYSE on Friday.   Here are the ones I have found.   Bull ETF’s: FAS, BGU, TNA, ERX, EDC, MWJ, TYH, and DZK.   Bear ETF’s: FAZ, BGZ, TZA, ERY, EDZ, MWN, TYP, DPK .   One can even trade options on most of these!   Remember, the leverage works both ways, they aim to go up or down at 3x the speed of the relevant index.   Still, if I have a good idea of the trend, these ETF’s may prove better than going to the casino and putting everything on black or red………..

Meanwhile, the GMI

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All indicators negative; 12th day of QQQQ short term down-trend

@ 6:03 am
GMI0/6
GMI-R0/10
T210838%

All of my indicators have turned negative again and I am back to cash.   I have considered buying some QID, but with my short term moving averages being flat, I will probably get repeatedly whipsawed as the indexes move above and below their averages.   However, at some point a real tradable trend will develop. There were 3 new highs and 138 new lows in my universe of 4,000 stocks on Friday.   Only 30% of the Nasdaq 100 stocks closed above their 30 day averages and the QQQQ   just completed the 12th day of its short term down-trend.

One of the GMI’s components tracks the percentage of “successful” stocks that hit a new high 10 days ago that closed higher today than they closed 10 days ago.   It is a useful indicator to see if break-out stocks are continuing to advance.   This indicator has been negative since late October,   largely because we rarely saw the required 20 new highs in a day.   You can see this indicator is still negative in the GMI table below….

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