Correction?
At mid-day today the S&P 500 went down to 1304, slightly below the recent low of 1306 and then it rebounded to its close of 1310. The day traders will say that was very important and bullish. I don’t think it means much for me as I watch the correction/(whatever it is) play out. It is completely meaningless for longer term investors. To have a real bottom, we need to close a little below 1306 and have better market internals. At this point I expect that we have a ways to go before it will be time to get back in the market in a meaningful way. As of today, we are 11.5% above the 200-day moving average. We could correct that far (11.5% drop from here)…or not; it’s anyone’s guess.
Our Navigate the Stock Market (NTMS) analysis improved a little today and it is now calling a HOLD. That doesn’t mean much since another down-day will push the NTMS back to a SELL signal.
The average time between Buy or Sell signals has been 84-days for 2010 and 2011. We may not have to wait that long though, because volumes have been low since the initial drop from the high on the 18th of February. That probably indicates little strength in selling and a shorter correction. We’ll have to see if volumes go up because that would convince us we are going to have a real correction. I am amazed that we have been flopping around with so little movement either way for 2-weeks.
I am still only 30% invested with a 50% hedge (2x-short position) in the trading portfolio.
