The NTSM decision model is purely mathematical; however, a review of all of the data presented (including output charts for NTMS indicators; market internals; overall NYSE volume, etc., each plotted vs. the S&P 500) can be helpful at times.
For example,
when I look at the VIX indicator for Monday, it is positive in its relation to the
overall NTMS model (VIX has been falling fast and that is good); however, the
plot of the values of VIX vs. the S&P 500 "suggests" that a TOP
in the market is near. The market has
generally topped when VIX dropped to around 14 or 15, slightly higher than its
current level.
NewHi/NewLo data also shows that while this market internal has been improving recently, over a longer-term, it has plateaued for the past three weeks at a level associated with recent market highs.
This sort of data is a reason why I am reluctant to get back in the market. On the other hand, I am also well aware that the reason for having a mathematical decision-model, with its decision-making rules, is to avoid paralysis of fear or greed. More importantly, my favorite trading advice is, ”trade what you see, not what you think.” At this point, I want to see a breakout of the trend, above its prior high. Here are a couple of rules for determining a trend line break”
NewHi/NewLo data also shows that while this market internal has been improving recently, over a longer-term, it has plateaued for the past three weeks at a level associated with recent market highs.
This sort of data is a reason why I am reluctant to get back in the market. On the other hand, I am also well aware that the reason for having a mathematical decision-model, with its decision-making rules, is to avoid paralysis of fear or greed. More importantly, my favorite trading advice is, ”trade what you see, not what you think.” At this point, I want to see a breakout of the trend, above its prior high. Here are a couple of rules for determining a trend line break”
-
The Two-Day Rule
states that price must close through the trend line for two successive days.
I’ll get back in the market when the rules are
satisfied. In other words, I want to see
two successive closes at or above 1467 or a close of 1510. I must admit, I haven’t completely decided
whether I want to see both rules satisfied or just one of the rules. It may be
a moot point; I think the market may give us a clearer view as earnings season
gets under way.
Earnings season starts with Alcoa after
Tuesday’s close. Alcoa is the first DOW
stock to report and its earnings are often scrutinized for hints regarding expected
earnings from other countries.
MARKET RECAP
Monday
the S&P 500 was down about 0.3% to 1462 (rounded). VIX also fell about 0.3% to 13.79.
NTSM
The NTSM analysis was HOLD Monday held in
check only by the Sentiment indicator.
Price, Volume, and VIX are all positive.
MY INVESTED POSITION
Based on the SELL signal, 7 November 2012, I
moved out of the stock market at 1377 on the S&P 500. Because of the negativity I have noted from
Hussman and others, I am currently invested in a range of near 15% invested in
stocks. 
