8-12-10 Market Indicator 2 Change
The Major Market Timing Indicator #2 changed to DOWN on Thursday 8/12/10. The publisher moved part of his holdings to cash funds, and is currently at 35% stock funds and 65% cash funds.
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Thanks Michael. Know you do some shorting but not recommended. If someone would want to short with reverse ETFs, do you think this market now, or soon, would be such a time to do so. Norm
There are many conflicting inputs on market direction at this point, and I don’t have good confidence in this DOWN signal:
1) Very short term indicators are screaming “buy” & the market has already fallen 4-5%.
2) This week is the monthly options expiration week, when the market almost always makes a 2-3 day move up between Monday & Thursday (sometimes a weak move, sometimes a strong move).
3) If the market does continue down, the likely downside target is between 1000-1050 on the S&P 500 – not very far from where we are at.
On the other hand:
1) Mid-term signals and long-term signals are pointing to a downward turn.
2) The economic news seems to be deteriorating.
3) The calendar is not good for bulls, as September is historically the worst month of the year for the market (see article at link below).
Just not enough to short from here. In fact I had an option “Put” position (short position) that I took out a few days ago (not in conjunction with my signal) – I closed the position on Friday. And I am still 35% long the market, although I may reduce it next week depending on how the market behaves. If the market doesn’t make any kind of convincing move up next week we’ll probably see further downside.
http://seekingalpha.com/article/93199-september-worst-month-for-market-performance
Thanks for posting Norm,
Mike