Watching for Halloween rally; $AAPL supporting $QQQ; Interest rates $TLT and the dollar $UUP rise and gold $GLD falls

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I am mainly in cash in my trading accounts but holding a small position in SQQQ. If the short term down-trend continues a few more days I will add more SQQQ (the inverse 3x leveraged bearish QQQ ETF). The T2108 is at 31% and would have to fall closer to 10% to suggest a very over-sold market where significant declines end. The 10.4 daily stochastic is at 25, low, but still not in extremely oversold territory. And the QQQ has just had an oversold bounce from its lower 15.2 Bollinger Band but it looks like this support level could fail to hold. The daily 12/26/9 MACD histograms are negative and declining, showing downward momentum. The GMI signal recently flashed Red, but  this signal has recently coincided with short term bottoms rather than tops. Time for me to be extra careful and to conserve cash while Mr. Market makes up his mind which direction to go.

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However, Mark Hulbert’s recent post reminds me that this may be the time to return to the market according to  the “Sell in May” strategy. Mark has a perspicacious empirical approach to analyzing the market’s behavior. Coming up is the seasonally strongest time for the market, he writes,  and the current weakness may be setting us up for it. Scare everyone into selling out to stronger hands who will buy low and profit from the subsequent move up. Most advances begin after a decline. So I will reverse and go long if this market shows any signs of strength in the coming days………

One of the major reasons the QQQ is outperforming SPY and DIA is the technical strength shown by AAPL, which is heavily weighted in the computation of QQQ’s underlying index (NASDAQ 100). AAPL is defying gravity and may  be the last component to  decline before the current weakness in the QQQ ends? (When the bulls give up on AAPL, the end of the decline may be near.)

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A major factor behind the weakening of the indexes is falling long term government bonds, representing higher interest rates and leading to lower gold prices. I follow the 20+ year government bond ETF, TLT, as an indicator of how bond traders feel about long term interest rates. TLT is in  a swoon, leading to a higher dollar and lower gold prices.

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And the dollar rises, as shown by UUP.

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And gold falls, as shown by GLD. It all fits together like a jig saw puzzle–until it doesn’t…

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The GMI table below shows that the QQQ has just closed the week below its critical 10 week average while the SPY has done so for 6 straight weeks. Will there be a Halloween rally?

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New $QQQ short term down-trend and GMI turns Red; $QQQ on critical support

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Both my QQQ short term trend indicator and the GMI signaled weakness on Wednesday. QQQ short term down-trends often (41%)  fail (end) within 5 days. After 5 days I feel more comfortable owning SQQQ. The QQQ is resting on support at its lower 15.2 daily Bollinger Band and its 50 day average (green dotted line). Thursday will be a critical day to watch its action.

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GLB: $BZUN and $CATM; TC2000 work-shop and their new Version 16

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This weekly chart shows that BZUN had a high volume GLB break-out on Friday to an all-time high. BZUN has a 99 RS rating on IBD.  BZUN has more than tripled over the past 250 days.

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CATM also broke out last week. CATM has an IBD Composite rating of 93.

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I attended the free TC2000 work-shop in Virginia on Saturday. The new Version 16 of TC2000 allows trading from charts and includes options. It also allows one to paper trade right off the charts so as to test out various signals and strategies. I was amazed by what is now possible with this powerful software. Check it out!

The GMI is now 3, but it is still on a Green signal.

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