The S&P 500 had a 1% down day today, Wednesday. That’s always disconcerting. It still didn’t feel like the start of a correction…maybe it’s just wishful thinking on my part. Sometimes a 1% down day actually causes more buying…buy-the-dips…but we’ll see.
Our indicators are based on closing data and the sentiment indicator is based on RYDEX 2x fund volumes so we generally wait until after the close and RYDEX publishes their data to update the system.
SUMMARY OF INDICATORS:
As of today’s close, our 4-areas of market analysis present the following picture:
SENTIMENT: Neutral. %-bulls indicator is 53%. This is an elevated number, but not enough to issue a sell signal. Our indicator is a 5-day moving average. The %-bull indicator at the close today was 60%. I had to go all the way back to 6 May 2010 to find a close that was that high. That was a week after the April top in the S&P, but I don’t think we’ve topped yet.
Investors Intelligence Survey (http://www.market-harmonics.com/free-charts/sentiment/investors_intelligence.htm) has a reading of 57% so we are close to their survey value.
(Sentiment is a reverse indicator; a high %-bulls indicator is bearish for the market and vice versa.)
PRICE: Buy. Price action has been positive although we have seen some pullback in the last week.
VOLUME: Neutral. A couple of down days have pulled the volume indicator down, but it is still in neutral territory. I’d still like to see stronger up-volume to get this indicator into the BUY range.
VIX: Neutral. Long term the VIX has been falling, and that is still positive for the market, even though the VIX popped up 9% today. If the VIX continues up this indicator will quickly turn to sell.
The overall indicators are HOLD. Last week, they were BUY.
The indicators can turn quickly and I’ll post if we move to a SELL. If there is no SELL signal, normally I’ll post weekly after the Wednesday close.
MY INVESTED POSITION: I remain 100% invested in retirement funds and about 15% long in the trading account. (This is an absurdly aggressive position (for an old guy) and I don’t recommend it unless you have an extremely high tolerance for risk.)
