SUMMARY
OF NTSM INDICATORS:
As
of today’s close, our 4-areas of market analysis present the following picture:
SENTIMENT: Neutral.
%-bulls indicator fell slightly to 65% as of tonight. Still this is a very high sentiment value. As I have commented before, when 2 out of
every 3-people think it is time to buy, it is really time to sell. The sentiment indicator remained above 65%
for 5-straight days.
The
last 2-times sentiment hit 66% we had pullbacks of 8% and 15% in 2010. The 2-times before that resulted in 6%
pullbacks in 2009. (2009 was an odd year
though because after the deep correction in 2008, if you were overly bullish,
you were right.)
{Just a reminder:
When the Navigate the Stock Market (NTSM) analysis gives a sell
indication (predicting a correction as it did on 22 February), we have no idea
how deep the correction may be. Early
on, I guessed that the correction might be small, in the 10% range. That was a guess partly based on the fact
that our Sentiment indicator was not particularly elevated. At this point, sentiment has joined the party
with a Sell indication. That doesn’t
mean that we expect a “whopper” correction to use Dr. Hussman’s word (see yesterday’s
Blog). I think there are so many unknowns
at this point (oil price; the economy is slowing; housing is still a mess and by some measures getting worse; budget deficits; end of QE2; pick your poison.) that
we don’t know if this is THE TOP or not.
It may be, as Sam Stoval, chief investment strategist for Standard & Poor's
Equity Research Services,) said a 7-11 correction (7 to
11% down). It isn't as clear as 2007 when we made the old highs and banks were failing.}
PRICE:
Buy. The Price analysis indicator has moved up and is now firmly in Buy territory. The up moves have been picking up steam.
VOLUME:
Neutral. Volume has been meandering
around with little direction. Volume is Hold.
VIX: Neutral.
Our VIX indicator is Hold. VIX
isn’t giving us much indication which way the market will break.
SUMMARY:
The overall Navigate the Stock Market analysis is NEUTRAL today. (See the page
How to Use the NTSM System).
NTMS
switched to SELL on 22 February. Since
then, NTMS analysis has been Sell or Hold (it remained Hold today); therefore, I
am still conservatively positioned with only 30% invested in stocks. I went 2xshort with 50% of my trading
portfolio using QID and Inverse Rydex 2xNazdaq fund yesterday.
The
function of the short position is to hedge the portfolio somewhat. If the market declines, as we expect, the
short position will help make up for losses in the long-term portfolio.
