The Navigate the Stock Market (NTSM) analysis moved to a SELL again today. Not surprising after the day we had today – down nearly 2%.
Repeating my comment from 1 March: “I wouldn’t be surprised to see a couple of quick down days soon. Today should have the “buy-the-dip” crowd worried that this may be more than just a dip. That may bring out some sellers.”
To add to that comment, I’d expect the pace of selling to pick up. We are still 10% above the 200-day moving average and we may see the S&P 500 drop that far. That would make this a 15% correction if it were to happen.
There is a lot of uncertainty in the Middle East as well as our own economic worries that continue to overhang the market. Yesterday on CNBC’s Fast Money, Brian Kelly stated that it has been 2-yrs since the previous low and, according to him, that puts us at risk for another major drop. (I have already commented that we are 4.2 years out from the previous high and that was the point when the S&P collapsed in that last bear market. (See my 23 Feb 2011 comments.)
Mr. Kelly went on the talk about Fibonacci numbers and I sort of dozed off. I have no appreciation of that sort of witchcraft; I shouldn’t criticize, though, because a lot of people really get into that stuff – and presumably, they make money at it.
I still think this is a correction that will be in the 10% range and may get down to 15% overall. That’s just a guess though. As I have commented ad nauseam, trade what you see not what you think.
The NTMS doesn’t predict what will happen from here; it just identifies Buy – Sell points based on sentiment, price, volume, and VIX. NTSM can turn quickly. In the last correction it went from Sell to Buy in 2-days.
I am still 30% invested in stocks with a 50% hedge (2x-short position) in the trading portfolio.
