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).
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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.
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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.
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Major Market Timing indicator #1:
Indicator #1 remains on “DOWN”, but is likely to move to “UP” some time this week. An e-mail will be sent out to all subscribers if the indicator changes to “UP”.
Major Market Timing indicator #2:
Indicator #2 remains on “UP”. A “reiterated” or “new” “UP” indicator will likely occur this week (the week of June 27th).
Please check back for updates.
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Major Market Timing indicator #1:
Indicator #1 remains on “DOWN”, but is in an area where a new “UP” trend is likely to occur.
Major Market Timing indicator #2:
Indicator #2 remains on “UP”. The market has been “bouncing up & down” around the area (S&P 500 1288) where the “UP” was triggered. A decisive move below S&P 500 1248 would trigger a new “DOWN” and “stop loss” action.
In the last 3 years a major low for the year and the beginning of a new uptrend occurred in the S&P 500 in last week of June or first week of July. Given the recent 10% drop in the S&P 500, a repeat appears likely in 2011.
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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.
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