The key take-away today is: We saw some deterioration in indicators. It looks like we are closer to a dip or at least a stall.
My daily sum of 20 Indicators declined
from +5 to +1 on 8 Nov (a positive number is bullish; negatives are bearish)
while the 10-day smoothed sum that negates the daily fluctuations slipped
from +46 to +43. (These numbers sometimes change after I post the blog based on
data that comes in late.) A reminder: Most of these indicators are short-term.
RSI is remains Bearishly overbought at 81 and that gives us one topping indicator that is calling a top. Bollinger Bands are close to overbought and when RSI and Bollinger Bands combine with overbought calls, we often see some retreat in the markets. MACD of Breadth turned bearish. This one seems to be a decent indicator.
In addition, we have the statistical analysis of price-volume moves that continues to suggest a top within 20 days. This stat also suggests a 1 to 2% down day is coming. (I don’t use this in my topping indicators because its timing is poor. It’s hard to trade an indicator that warns of an event sometime in the next month or so.)
I remain bullish long-term, but I am getting cautious short-term.
I sold my 2xS&P 500 trading position Thursday. I don’t expect a huge retreat, but a big down day, doubled by the 2xS&P 500 leveraged fund, could have cut my 7% profit in half - best to take profits.
