The NTSM analysis called a SELL on the S&P 500 yesterday. That was the first change since the 2 July 2010 buy-signal.
Today we had another SELL signal.
SUMMARY OF NTSM INDICATORS:
As of today’s close, our 4-areas of market analysis present the following picture:
SENTIMENT: Neutral. %-bulls indicator is now 47%. This is a middle of the road value for sentiment. (Sentiment is a reverse indicator; a high %-bulls indicator is bearish for the market and vice versa.)
PRICE: Sell. The NTMS has recorded a clear deceleration in upside moves since the end of January.
VOLUME: Sell. More volume has been going to the downside…this indicator dropped to a SELL today after being neutral yesterday.
VIX: Sell. Our VIX indicator moved up another 10% today after moving up 27% yesterday.
The overall status for the Navigate the Stock Market system is SELL. (Our indicators are based on closing data so we generally wait until after the market close to update the system.)
Looking at the overall NTMS indicators, this looks like a typical correction; but there is no way to know how far the market may fall when looking at the indicators. We may guess that if the Sentiment values don’t get overextended, then maybe we’ll have a small correction…say in the range of 10%. It could get a lot worse though. There are no absolutes in this business.
I am a little concerned that it has been about 4.2 years since the previous high on the S&P. When we look at the 1966-Bear Market, a drop of about 25% in market prices (a 50% retracement) started at about the same 4.2 year point. The difference is that in the 1966-Bear, the Dow made it back to the old high, so that comparison may not be warranted here. (See the Page link at the side of this blog page, titled; “Compare 1966 Bear Market to the Current Bear Market.” The major concern is oil price. If the oil price remains at the current high level for too long we will likely see a significant drop in the markets.
MY INVESTED POSITION: I moved to an all cash position in retirement funds today and that makes my overall stock position about 30%.
Further, I took a 50% position in the Rydex Inverse Nazdaq 100 2x Strategy fund in my trading account. This fund is a “bear” fund that doubles the inverse of the Nazdaq 100. That means that it will go up twice as fast as the Naz 100 goes down…and vice versa. (If I am wrong I’ll lose money twice as fast!)
This moves me to a conservative position in terms of stock exposure; hedges some investments; and reduces overall risk considerably.
