5-22-10 Warning-Indicator 2

This post is an outdated message kept for historical reference – please refer to the more recent post for an update on indicator #2:

Timing Indicator Change Alert

The picture became clearer with Friday’s upward move.   Major Market Timing Indicator #2 will change to UP with an intraday break of S&P 500 1091 on Monday 5/24/10.  In other words, if the S&P 500 high for the day is over 1091, the indicator will change to “UP”.  The publisher will move most of his holdings to more aggressive funds with this indicator change.  The probability of a positive move with this indicator change is good, but there is no guarantee.

  • If Indicator #2 does change to up, we will publish a formal “stop loss” level used by the publisher for the position.  (Google search “stop loss order” if you aren’t familiar with this concept). 
  • The stop loss level will be S&P 500 1048 – meaning a close of the market below 1048 will trigger an exit of the positions and will most likely trigger a “DOWN” signal in Indicator #2.
  • The publisher will only use mutual funds & ETF that allow for a quick exit without penalty in the event that the stop loss level does occur.

There is still heightened risk with the market given the annual “calendar-based” market drop risk in May-June, the Europe financial crisis, the banks new fear to lend, and the problems with the companies involved in the Gulf of Mexico oil disaster.

Note that we’ve changed the “HOLD” indicator to “HOLD/REDUCE”, although the triggers for the indicator have not changed.   “HOLD” has always meant “reduce risk”, but that wasn’t clear from the term “HOLD”.