GMI:5; GMI-R: 6; Split market continues; BAC-plunging banks

The GMI is 5 (of 6) and the GMI-R is 6 (of 10).  The GMI-R counts 4 additional short term indicators not counted in the GMI. Gmi0606

The fact that the GMI-R is only 6 of 10 reflects the weakening in the QQQQ.  Hard to believe, the QQQQ and IJR (small-caps) remain in up-trends even as the SPY and DIA remain in solid down-trends.  There were 115 new highs and 116 new lows in my universe of 4,000 stocks on Friday.  However, only 44% of the Nasdaq100 stocks closed above their 30 day averages, down from over 80% in mid-May.  And only 53% of the 4,000 stocks in my universe closed above their 10 week averages. The Worden T2108 indicator is now at 50%, down from 77% in early May, but far from the area where bottoms tend to occur (below 15%).

Last week I transferred all of my pension money from mutual funds into money market funds.  When I looked at how most of the Dow 30 stocks are  doing, I became very concerned of the future of that index and the general market.  Only 8 Dow stocks closed Friday above their critical 30 week averages, and 3 of these 8 are within only one point of falling below that average.  A stock below its 30 week average is likely in a down-trend and I never buy a stock trading below its 30 week average. Only 32% of the S&P500 stocks and 42% of the Nasdaq100 stocks closed one or more points above their 30 week averages. Most important, the SPY and DIA index ETF's themselves are both below their declining 30 week averages.  The QQQQ's 30 week average is also declining, but that index closed above that average, for now.  So, I remain largely in cash and have written covered calls on most of my long stock positions.

The major bank stocks look especially weak. BAC

Look at this weekly chart of  Bank of America (red line= 30week average; click on chart to enlarge). Other bank stocks with similar charts include : WB, UBS, STI, and DB.  When major bank stocks are in a free-fall, can the rest of the market be far behind?

GMI: 5; GMI-R: 9; 18th day of QQQQ short term up-trend; writing covered calls; CPST up 50%

The GMI held at 5 (of 6) and the GMI-R at 9 (of 10).  There were 130 new highs and 58 new lows in my universe of 4,000 stocks on Thursday. 63% of the Nasdaq 100 stocks closed above their 30 day averages.  It is time for me to accumulate QLD and after Friday, to write new calls on IBD100 stocks.  I  write calls on growth stocks in up-trends that will not report earnings during the life of the option.  I only write near term calls.  So I will start writing May calls next week.  Among the IBD100 stocks that meet these criteria and have decent call premiums above 4%  are:  RIMM, MON, MOS, MTL, FLS and GTLS.  I may do buy-writes on some of these stocks next week.  Meanwhile, I will wait for Saturday when my April calls will expire or be executed and my account will again have an infusion of cash.  Making 4% each month is ample return for me. By the way, I am most successful writing covered calls when the QQQQ is in an up-trend, as is the case now.  Check out CPST, now up almost 50% since I wrote about it on March 27:   Judy can sure pick stocks!