I looked again at the data
for 4 June 2012 when the S&P 500 was 1278.
That was a test of the prior low of 1278 the day before. Market internals improved on the test; but
not enough, in my opinion. It’s a close
call, but it still (on further consideration) looks like a failed test to me
and, assuming I am right, that means the S&P 500 is likely to re-test the
1278 area again. Not everyone agrees
because the S&P 500 is up 3% since then.
If I am right, this rally will fail, but it is important to keep
emotions out of these decisions.
There has been so much
negative news we must always remember that we don’t have all the news and also,
our interpretation of the news is going to be less than perfect. In other words, just because things look bad
doesn’t mean the market will continue to go down.
The most success I have
had (timing the market) is when I have used an analytical system. My current system, for lack of a more
interesting title is called simply, the NTSM system (short for Navigate the
Stock Market). If I am wrong about the 4
June test of the prior low, I am counting on the NTSM system to give a buy
signal to correct the miss. So far, the
market is not reacting positively enough to generate a buy . Given all the bad news, there is nothing wrong with maintaining a conservative position with regard to the stock market.
MARKET
The S&P 500 finished UP
0.8% at 1326. VIX fell 2.3% to 21.23
today, Friday.
NTSM
The NTSM remained HOLD Friday.
MY INVESTED POSITION
I reduced my stock
holdings to 30% (0% in stock in the 401k) at S&P 1358 after the SELL signal
on 9 May 2012. (See the page “How to Use the NTSM System” – the link is on the
right side of this page). I cut my stock
position to 15% on 17 May in order to maintain a 10% gain in a
trading/longer-term position I had in the QQQ.
