GMI: 4; GMI-R: 8; GMI performance; Judy’s pick: CYTR

The GMI fell one, to 4, as my 10 Day Successful New High Index turned negative–barely. (Click on Table to enlarge.) Gmi1026  This index measures the number of stocks that hit a new high 10 days ago that closed higher than they did 10 days earlier.  (In a strong market, stocks should rise after hitting new highs.) The GMI-R also fell one, to 80% for the same reason.  If the SPY holds its own on Monday, the Daily SPY Index will turn positive.  The QQQQ is in the 41st day of its short term up-trend and the QQQQ and SPY have closed above their 10 week averages for 7 weeks.  (I typically make money trading growth stocks when the QQQQ is consistently above its 10 week average.) The longer term trends are strong, with the GMI-L now at 94%.  The Worden T2108 indicator is now back to 55%, up from its recent low of 44%….

The GMI continues to do its job of defining the QQQQ trend.  I will trade long  in the market as long as the GMI is greater than 2.  Gmiperf1026 (Click on chart to enlarge.)   I continually have to learn the lesson that if I would just ride the QQQQ up-trend by holding the Pro Shares Ultra-QQQQ ETF, QLD (the QLD aims to rise or fall twice as much as the QQQQ), I can virtually outperform every other strategy I am likely to pursue.  Thus, since the GMI turned 3, on August 31, the QQQQ has risen 10.35% and the QLD by 20.07%.  How many of us have had their portfolio rise more than 20% in this time period, with a single trade?  Since August 31, only 19% of the Nasdaq 100 stocks and 7% of the S&P500 stocks have risen more than 20%, along with 34%of the stocks on the IBD100 list published on August 18.  We would have had to have been pretty lucky to select an entire portfolio of individual stocks that would have outperformed just sitting in the QLD! So many traders are interested in being right (proving their strategy or that they are smart), instead of just making money.  I continually have to resist falling into this trap…..

As I have written before, my friend Judy is an excellent stock picker who thoroughly researches a stock and only buys it after she has fallen in love with its concept. Well, Judy recently told me about a stock in the promising RNAi field.  You can look up this exciting technology yourselves by going to the company’s home page.  Well, I don’t like cheap stocks and I always subject Judy’s picks to my own technical analysis before I buy. Cytr  She buys at much lower prices than I do and amusingly watches others buy at higher levels as brokerage analysts discover her picks. So Judy told me about CYTR, which I did buy around $3.50.  The stock closed Friday at $4.65 up 12.59% for the day and 28.45% for the week!  CYTR has a lot of technical strength, so I thought I would share it with you, not as a recommendation, but to show you some signs that I look before I buy a stock.  (Click on chart to enlarge.) The weekly chart shows that CYTR has now closed above its 30 week average (red line), a critical buy signal for me.  It is also coming off of a nine month base that came after a huge rise. As you know, I like to buy stocks that have already doubled, and CYTR is up 250% in the past year.  And other RNAi stocks (ALNY, ISIS) are strong.  If CYTR’s clinical trials prove successful and the stock becomes a big winner, I will have plenty of time to average up as the stock climbs….


GMI: 6; GMI-R: 10; new lows climbing; COMV climbs

The GMI remains at 6 and the GMI-R at 10.  In spite these strong readings, it  is disconcerting to me that the number of stocks in my universe of 4,000 that are hitting new lows is climbing.  On Thursday, there were 157 new highs and 153 new lows.  It is strange to see the steady climb in new lows.  Many of these lows are regional banks that are in the midst of  large declines. As Judy said to me, this may be the reason the Fed reduced rates.  They may have foreseen the bank carnage.  Speaking of Judy, her stock pick, COMV, that I wrote about on October 10, at 35.01, moved up again on Thursday, to 38.46.

GMI: 6; GMI Revised; EDU – another one of Judy’s picks

The GMI is still at a maximum reading of 6, and the number of new highs in my universe of 4,000 stocks rose to 216 on Monday. Monday was the 32nd day in the current QQQQ short term up-trend. Gmi1015 Note that the Worden T2108 indicator has now declined to 67%, down from a high of 82% on October 5.  (Click on the table to enlarge.)

After much thought, I have revised the GMI by adding 4 new indicators, signified by an "*". The GMI-R  ranges from 0-10 and may provide a more sensitive measure of the trend of the general market.  For the time being, I will post the original GMI and the revised GMI-R in the table for the benefit of readers who use the original index…….

Weeks ago, my talented stock picking friend, Judy, urged me to buy EDU.  Her research indicated it was the "Kaplan" of China, helping the Chinese population to excel in prep-type exams to progress to higher educational levels . Edu She bought the stock in early July and August in the low to mid 50’s. Well, I told her Sunday night that I would not write about EDU then because earnings were expected Monday.  So, earnings came out and the stock shot up 12.56% on Monday in a sloppy market. (Click on chart to enlarge.)  I need to follow Judy’s advice much more often and post more of her picks.

See my disclaimers at the bottom of the prior post.