I
went back into stocks in the 401k (TSP) 100% Friday, I must admit, with
considerable trepidation. There appears
to be a recession coming and the charts don’t look very good either. See the S&P 500 chart below.
We
need to break the upper trend line before we can feel comfortable.
I
always look for a low volume test to end a correction. That would be a lower low (or close to a
lower low) on low volume and improving market internals. We didn’t get a low volume successful test
last week. Looking at volume data, I can
see no reason why the market took off Tuesday at the end of the day. As the chart below shows, the S&P 500
went up roughly 4% in about ½-hour.
I
checked hourly volume data on the possibility that the big boys (with their big
computers) predicted a low volume successful test of the 1099 low and moved in
before the close. That theory didn’t
hold water though, volumes were high all day.
The
published “historical” Yahoo data for the S&P 500 for Tuesday was quite
low, but the NYSE data was very high so I conclude the Yahoo numbers are wrong. The same is true for Wednesday. NYSE volumes were too high.
Volume
has been strong in the afternoons; that is when the institutional boys move and
that is also considered smart money. I
think the NTSM system is right; I just can’t find a technical reason. Perhaps it was news and it may have been a
European statement about backstopping the European Banks, but I never saw
anything specific.
It
is hard to believe that we will get out of this mess so easily. Some recession stocks show that the recession
panic has crushed some stocks. Manitowoc
makes construction cranes. Their stock
is down to 1/3 of what it was when this correction started. Perhaps the big money thinks that the market
has already gone down too far. I suppose
I won’t have an answer.
That’s
why I like the NTSM analysis because it looks at indicators in Sentiment,
Price, Volume and VIX in the S&P 500 rather than trying to guess about the
economy and outside influences.
VIX
has been coming down and more volume has been flowing to the buy side and that
combined with low sentiment kicked the NTSM system to a BUY.
NTSM
was BUY again on Friday.
The
bottom line of my rambling tonight is that I will stay alert because, we may
get a quick turnaround and a Sell signal if the market deteriorates over the
next week or two.
The
market may move back to the 1099 level too for a test and that will not feel
too good since I am now very long, but I doubt that a move to 1099 will give a sell
signal.
I sold on the 27 July sell signal at S&P
500 1301 and I bought back in at S&P 500 1155 on 7 Oct
I am 100% long in the long term portfolio (100%
stocks in the 401k.) (See the page “How to
Use the NTSM System” – the link is on the right side of this page).I went 50% long in the trading portfolio on 3 Oct and 100% long on 7 Oct. If there is a hint of decline, I may take profits and go short for another run at that pesky 1100 level in the Trading Portfolio.
