Dr. Eric Wish developed the Wishing Wealth General Market Index (GMI) to monitor the general market trend. The maximum GMI score is six and the minimum is zero. A score of six is the most bullish and a zero score is the most bearish. The updated GMI score can be viewed each morning prior to the market open on Dr. Wish's website by clicking here: WishingWealth GMI
We will track two separate portfolios. One will trade the PowerShares QQQ Trust, Series 1 (QQQ) ETF and the other will trade the ProShares Ultra QQQ (QLD) ETF.
Warning: The QLD seeks to return twice the daily return of the QQQ, which means that it will lose twice as much as well, i.e. if the QQQ dropped 2.5% yesterday, the QLD would have declined 5%. Note also that it is designed as a short term trading vehicle for a one day trade and tracking errors occur over longer holding periods. QLD is only advised for experienced investors who fully understand the consequences.
For the purposes of portfolio tracking we will use the following criteria. A buy signal is issued when the GMI rises to 4 or more for two days. A sell signal is issued when the GMI drops to 2 or less for two days. The ETF will be bought or sold at the opening price on the following day's market opening price.
General Market Index - Current Signal and History
The six criteria that formulate the GMI score are as follows:
1. Wishing Wealth 10 Day Successful New High Index Is Greater than 100. Dr. Wish follows a “universe” of about 5,900 actively traded stocks that are $5 or more. The number of stocks that hit a new 52 week high 10 days ago and closed today higher than they closed 10 days ago when they made their highs are counted. Any number above 100 is considered to be a bullish sign.
2. At Least 100 New Highs in a day in the Universe of 5,900 stocks being tracked. In a bullish market there should at least 100 stocks hitting new highs.
3. Wishing Wealth Daily QQQ Index Is Positive. The QQQ tracks the 100 largest non-financial stocks in the NASDAQ. This index is positive when the technical indicators suggest that the index is in a rising trend. The criteria for this indicator are proprietry.
4. Wishing Wealth Daily SPY Index Is Positive. This index is similar to #3 above, but is a daily measure of the SPY, an index that tracks the S&P 500 index.
5. Weekly QQQ Index is Positive. This is the same as criteria #3 above but is based on the weekly trend rather than the daily trend. A change in trend will occur in the daily indicator before the weekly indicator. In a strong market both the daily and weekly trends will be positive.
6. The IBD Mutual Fund Index is Above It's 50 day Moving Average. Although this index is no longer published or available online, IBD subscribers can get the full chart by typing in 0muti in the charting function on the IBD home page.
One point is awarded for each of the criteria listed above. The maximum score is six and the minimum is zero.
Portfolio changes will occur at the market open prices. A buy signal when the GMI is 4 or more for 2 consecutive days and sell signal when the GMI is 2 or less for 2 consecutive days. For example, if the portfolio is in cash and the GMI is 2 on Monday, 4 on Tuesday and 6 on Wednesday. The ETFs will be purchased at the market open on Thursday. (Revised for 2014: The GMI is posted either late at night after the market is closed or early the next morning before the market opens. Eg. Dr. Wish posts a GMI of 2 on Sunday - this is the GMI signal for Friday's close. So, if the next GMI posted late Monday or early Tuesday morning is also 2, then this is a sell signal and the ETFs will be sold at Tuesday's open. This results in the buy and sell transactions occurring a day earlier than tracked previously where we would have waited until Wednesday's open to sell.)
The current holding is shown below is gold colored font.
Worden T2108 Indicator
The T2018 is a technical indicator. It is the percentage of stocks trading above their 40-day moving averages (DMAs) in price. The rule of thumb for interpreting this indicator is that the market is oversold when T2108 drops below 20%, and the market is overbought when T2108 is over 70%. You can read more on this here.