NAVIGATE THE STOCK MARKET FOCUSES ON:
(1) Daily momentum analysis of the DOW 30 stocks and 15 ETFs across various market sectors.
(2) Stock Market commentary and analysis.
(3) Buy/Sell signals for major market turns.
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Tuesday, February 22, 2011
SELL signal
Today we got a SELL signal in our Navigate the Stock Market System.There were technical reasons and geo-political concerns.
VIX is a reliable indicator within our system.The VIX is calculated from both call and put options of the S&P 500 and looks out about 30-days into the future. The VIX is a widely used measure of market risk.The VIX moved up 27% today and that is not good for the S&P going forward.With the huge one-day, run-up in VIX, our VIX indicator flashed SELL.In addition, our price indicator has been trending down since the end of January (with a lot of bouncing along the way) and it also finally called a SELL today.One of our statistical measures went over the top to a SELL signal.Another negative: at the close Friday the S&P 500 was over 15% above its 200-day moving average and that is the level where the correction started in January 2010.(I wanted to get a sentiment reading tonight, but RYDEX has still not published their closing Asset Value data that we use for the Sentiment indicator.It is probably a neutral indicator; I just wanted to see how it moved.I’ll report on it tomorrow night.)
On top of that, we had geopolitical concerns from more turmoil in the Middle East and that caused a spike of about 6% in oil prices today. That spooked the market over the expectation of $4.00 gasoline this summer and the possibility it could go higher.
The key to trading stocks is to trade what you see; not what you think.I think this will be about a 10% correction from top to bottom and we’ll be fine afterward.What I see is the NTMS analysis giving a SELL signal.
So…I will be selling my retirement accounts tomorrow so I will about 30% invested overall.Since I am now 100% invested in stocks, I am way overexposed for any rational portfolio.The only thing that would change my mind would be a HUGE reversal that would create a BUY in the NTSM system tomorrow; that is not likely.The odds favor an up day…but not a huge reversal.