Based on data Thursday, Friday and this morning, the markets are improving. Regular readers know that I thought Thursday (15 Jan) was a buy-the-dip opportunity, but I wanted some further confirmation before giving a BUY signal. I think one can BUY today for the following reasons:
-UP volume was strong on Friday after the low on Thursday (15 Jan).
-RSI was oversold Thursday.
-Volume was down on Thursday, indicating a slowing of selling and this suggests a bottom.
-As of this morning, New-high new low data is finally looking up. Most other market internals are improving on a 10-day moving average basis and that looks generally positive to me.
-Statistical parameters have improved indicating the market is “acting better”. The size of up and down moves has gotten smaller indicating more bullish conditions.
I’d be concerned if the S&P 500 drops below 2000. On the other hand, it would be bullish if the S&P 500 can finish up today.
MY INVESTED POSITION
Since I am already fully invested in my long-term accounts (50% invested in stocks), this only affects trading for me. Friday and this morning I took some cash and used it on a short term basis to place some small long-bets in trading accounts. Keep tight stops (or simply sell) if the market heads down.
I will maintain 50% long in long-term accounts until I see a sell signal in the NTSM system. That could still happen quickly if the market turns down. I will probably close short term positions tomorrow if tomorrow is a down day.
