As
of today’s close, our 4-areas of market analysis present the following picture:
SENTIMENT: Neutral. As of yesterday’s close Sentiment is up to 57% Bulls. That’s really amazingly high, given everything that is going on in the market; it shows a lot of complacency. We would have had a Buy signal today, but there’s too much Bullishness out there.
PRICE: Neutral.
VOLUME:
Sell. Our variant of On Balance Volume is barely a sell.
VIX:
Neutral. The daily value of VIX was up 4%
today, but our long term indicator is up dramatically and may soon be a Sell. VIX and Volume are the most reliable
indicators.
NTSM
analysis switched to SELL on Friday, 3 June; it remains HOLD today. Yesterday’ comment is still true: “We are
getting closer to a Buy is some areas of the NTSM analysis; other areas are
deteriorating, so at this point, we could go either way.” (See the page “How to Use the NTSM System”).
I
am defensively positioned with 30% invested in stocks.
NOW,
what follows is not a prediction – it’s just discussion. In 2007 the TOP was easy to call. We had made the old highs; couldn’t seem to
go higher; and banks started failing.
This
time around it may not be so clear cut, but here’s a thought about risk. The
recent high on the S&P was about 15% below the 1550 high. So if you stay out of the market, you might
miss 15% appreciation…but only if you stayed in and managed to then get out
exactly at the top. (I’m assuming that with all the issues, we will not get
past the old highs.) On the other hand, the potential is that we
will could see a 50% drop. Hmmm…15% up
or 50% down? I’m recommending caution
because we don’t know which way this thing will go, but one thing I am sure
about - the downside risk is now higher
than the upside gain.
