I
commented a few days ago that I thought the S&P 500 was in a down
trend. That view changed today because
today’s up move to 1344 pushed the S&P above the 1 July value of 1340. To discern the trend, I look at only days
that I call statistically significant.
They tend to be the bigger days (up or down) that exceed NTSM
statistical parameters. 1344 is greater
than 1340 (another statistically significant day) so now we can state that the
trend is up. That’s a curious way of
looking at the market, but it seems to work and provide a valuable piece of
information. If you look at the S&P
chart since the end of April you’d have to say the overall trend was down since
we haven’t broken above the old high. So
we know something that other traders will take a while to figure out. Well, I won’t tell anyone if you won’t.
I
have also noted that there is a tendency for big (statistically significant) days
to be followed by some retracement in the opposite direction. About
60% of the time the next day is down. The
correlation-% is higher over the next week or so. In other words, if you look out a week or
two, it is, surprisingly, down 75% of the time.
Sounds like we should be rich right?
Unfortunately the numbers I just gave are only true if there is a lot of
volatility and we don’t have that now.
So it becomes an academic exercise.
Let’s
talk about the Navigate the Stock Market analysis.
The
up moves keep getting bigger so our Price indicator is bullish. The other 7-indicators in the categories of
Sentiment, Volume, and VIX are all neutral.
NTSM
is HOLD today. Since we had a previous
Buy indicator we are holding long. (See the page “How to Use the NTSM System” –
the link is on the right side of this page).
I
remain 50% invested. That is my fully
invested position for the time being.
