8-8-2011 Stop Loss “DOWN” in Indicator 1 and Indicator 2
Both indicator 1 and 2 are now confirmed on “DOWN” due to breaking our stop loss level of 1248 and the subsequent close below 1195.
Very short term indicators and medium term indicators are indicating a rebound move up is coming in the next 1-4 days. The market may fall further first, but will then bounce (typically the market bounces up substantially after a large move down).
In fact, Major Market Indicator #2 will move to UP pending on Tuesday. While I have moved 90%+ of my holdings to cash after the S&P 500 dropped below our “stop loss” level of 1248, I am now keeping my remaining stock fund positions in anticipation of the rebound.
Please check back Tuesday and Wednesday for further alerts on Indicator #2.
8-7-2011 Market Indicator Change Alert
The conditions on Friday will repeat for Monday: For the next day, the Major Market indicators (#1 and #2) will both stay on “UP” as long as the market closes over S&P 500 1195. With any CLOSE of the S&P below 1195 both indicators move to “DOWN”. Give the “volatile” situation over the last week I have substantially reduced my holdings in stock funds.
The market is very close to a short-term bounce up; if the Major Market indicator #2 does move to “DOWN”, it will likely reverse back to “UP” in 1-3 days.
At the time of this writing Sunday evening Eastern US time the Dow & S&P500 futures are down substancially, indicating a large market drop at the open on Monday. It’s possible the market may bounce after opening down.
8-5-2011 Market Indicator Change Alert
The S&P 500 fell under our “Stop” level of 1248 Thursday in a dramatic fashion, with the major markets falling 5%+. Both the Major Market Indicator #1 and #2 would have triggered to “DOWN” with the drop below 1248, except that the market fell so far below 1248 that it hit a key support level of 1200. (S&P 500 1200 is a point where the market is more likely to recover). Furthermore, the short term indicators that I use (but don’t publish) are indicating “UP”.
For the next day, the Major Market indicators (#1 and #2) will both stay on “UP” as long as the market closes over S&P 500 1195. With any close of the S&P below 1195 both indicators move to “DOWN”.
Give the “volatile” situation over the last day I have substantially reduced my holdings in stock funds, and will move to 100% cash with a close below 1195.
7-13-2011 New “UP” in Indicator 1
The Major Market Timing Indicator #1 will change to UP on Thursday 7/14/2011, effective at Thursday’s close. The publisher is adjusting his holdings to 100% stock funds with this change. I typically only move money into stock funds at around 3:30PM (before the market close) on days that the market (S&P 500) closes higher than the previous day’s S&P 500 high – this helps avoid investing in a falling market. Here are the scenarios moving forward.
It’s possible the market will fall 2-5% further from here despite the new “UP”. The market falling below 1248 would likely trigger a reversal back to “DOWN”.
Given the recent bad economic news, I am playing this more conservatively than normal and investing 100% in an S&P 500 Index fund (instead of a more aggressive technology fund).
7-10-2011 Market Indicator Status Update
Major Market Timing indicator #2:
Indicator #2 remains on “UP”. The indicator change to “UP” on 6/9/2011 did precede a large move up in the markets, with the Nasdaq 100 up 6.6% in the month following the change.
Major Market Timing indicator #1:
Indicator #1 remains on “DOWN”, but is in an area where a new “UP” trend may occur. We are waiting for a pull back to trigger the change to “UP”. Given the negative US employment report on Friday, we may see the pull back this week.
6-30-2011 Market Indicator Change Alert
On Thursday 6/30/2011 a new “UP” trend was indicated in Major Market Indicator #1; however, the change comes after 4 straight days of gains in the S&P 500, and a very short term indicator I watch (non-published) is indicating that a small pull back is likely.
We’ll wait until our short-term indicator is also indicating “UP” to change the Major Market Indicator #1 to “UP”. In the meanwhile we’ll display the indicator as “UP Pending”. I will send an e-mail when the indicator changes.
It appears relatively safe to move some funds into stock funds during the “UP Pending” stage, and I will do so myself – particularly on any “down” market day.
I plan to be in 100% stock funds once Indicator #1 moves to “UP”. Bond/cash funds are risky now, as Bonds appear very overpriced and the US dollar is at risk of further decline.
