6-9-2011 New “UP” in Indicator 2

The Major Market Timing Indicator #2 changed to UP on Thursday 6/9/2011, effective at Thursday’s close. The publisher adjusted his holdings to 50% aggressive funds, 50% TIP Bond fund.  The change resulted from an intraday rise above 1288 today. 1288 was yesterday’s high and the trigger level published yesterday.  Here are the scenarios moving forward:

1) The stock market continues higher from here. (Obviously desired)

2) The market drops another 1-3% from here and then rapidly starts a new uptrend. (Happens quite often)

3) The market falls 3%+, in which case the signal may reverse. A close below S&P 1248 (about 3% lower) would likely trigger a reversal.

I will prepare myself for all three of these scenarios, and won’t be surprised by any of them.

I like this setup because the market only has to move about 4% down to reverse – a relatively close distance.