The
Federal Reserve statement on the economy included the words “significant
downside risk.” Those 3-words sparked a
significant downside loss of 3% in the S&P 500 today, Wednesday.
Europe doesn't look good either. With
Greek debt currently yielding over 100%, the risk of default is a “certainty”
according to John Hussman, Phd. The more
I read about the potential impacts of default, the worse it appears for the
world economy. But then, I am not an
economist and there isn’t any point in listening to me muse on economic issues.
Today,
Wednesday, the Navigate the Stock Market analysis moved to SELL.
The
NTSM Volume indicator tanked; VIX has been a sell for over a month; Price
action dropped to neutral; Sentiment actually got a little more bullish, but it
is still extremely low. (Sentiment is a
reverse indicator – low sentiment is a Buy signal. But we also recognize that sometimes the
crowd is right. Today, the crowd had a
very low %-bull value of about 25%. That
means 3 out of 4 investors in select Rydex funds are betting the market will go
down.) VIX is our best performing
indicator and Sentiment is the worst. As
a result, VIX carries more weight in our analysis than Sentiment.
I sold on the 27 July sell signal at S&P 500 1301 and I am
defensively positioned with only a small amount of my portfolio invested in
stocks. (Zero stocks in the 401k.) (See the page “How to
Use the NTSM System” – the link is on the right side of this page).
I
am still waiting to get another chance to short. I lost 9% on the most recent trade – I simply
held it too long…or not long enough perhaps.
I bought and sold at the same level on the S&P, but using the QID
gave me a loss because the Nasdaq performed much better than the S&P. That’s bad trading; don’t do this at home!
