2-22-2011 Market Indicator Change Alert

Market Timing Indicator Change Alert

Some of our subscribers asked that we inform them if a new “DOWN” indicator change occurred even though the Major Market indicators are already on “DOWN”.

On Tuesday 2/22/2011 a warning for a potential new “DOWN” indicator in Major Market Timing Indicator #2 occurred – the new indicator has not yet been confirmed.     A confirmed “DOWN” in indicator #2 would occur with an S&P 500 close below 1309 on Wednesday or Thursday.

I will post an update immediately if the indicator change does occur.  I will post an update by Thursday night even if the indicator change does not occur.

Given recent market behavior, we would expect a correction of 5-10% from the peak of S&P 1344 if the new “DOWN” does occur.  However, deeper market drops have occurred in the past after new “DOWN” indicators.  Given the growing problem with high oil prices and unrest in the Middle East, the risk of a larger drop is higher than normal.

I had a 25% position in higher risk stock funds that I moved in entirety to a more conservative (“Bear-resistant”) stock fund due to the growing risk.  This stock fund is heavily weighted in energy, commodity, and health care holdings.  New allocation:  25% conservative stock fund, 75% Bond and Cash funds.