I can't do a whole lot of speculating about the SS. I'm still waiting for a sell confirmation. Remember though, we may not get one.
About 5 weeks ago we had a sell signal that lasted all of three days. It was very unusual too for it to whipsaw like that. Don says it was unusual for the SS to be close to a sell yesterday on a YTD high in the S&P. He thinks it's exhaustion, and he could be right.
This market has been very tough for everyone to figure out. It would seem obvious that it's because of the extreme nature of the market over the last year or so and especially since October.
I'm a little concerned though about another false signal. A big decline seems in the cards. Is it too obvious?
We just had a big announcement about the banking sector stress test. Is this a "sell the news event" or an opportunity to shake the bulls?
That's the 64 Million Dollar Question right now.
I am going to follow the SS signal regardless. It's the best indicator I'm aware of right now and I know what happens when I don't trust it. But if lightning strikes again and the signal turns out to be false, I'm out of the market for an extended time while the market possibly rallies on without me.
So what are the odds of a that happening?
Not very good IMO. I think the risk is now to the downside. While I don't use fundamentals to trade, I certainly didn't get in the market two days ago because I believed all the hype about turning the corner and green shoots. But in this case a sell signal by the SS would be a confirmation of sorts that fundamentals do matter and that the economy is still in for a rough time.
So now it's time to see whether the market really thought things were just dandy or whether it just wanted to take the bears to the woodshed for awhile. Stay tuned. It may not be long before we have our answer.
About 5 weeks ago we had a sell signal that lasted all of three days. It was very unusual too for it to whipsaw like that. Don says it was unusual for the SS to be close to a sell yesterday on a YTD high in the S&P. He thinks it's exhaustion, and he could be right.
This market has been very tough for everyone to figure out. It would seem obvious that it's because of the extreme nature of the market over the last year or so and especially since October.
I'm a little concerned though about another false signal. A big decline seems in the cards. Is it too obvious?
We just had a big announcement about the banking sector stress test. Is this a "sell the news event" or an opportunity to shake the bulls?
That's the 64 Million Dollar Question right now.
I am going to follow the SS signal regardless. It's the best indicator I'm aware of right now and I know what happens when I don't trust it. But if lightning strikes again and the signal turns out to be false, I'm out of the market for an extended time while the market possibly rallies on without me.
So what are the odds of a that happening?
Not very good IMO. I think the risk is now to the downside. While I don't use fundamentals to trade, I certainly didn't get in the market two days ago because I believed all the hype about turning the corner and green shoots. But in this case a sell signal by the SS would be a confirmation of sorts that fundamentals do matter and that the economy is still in for a rough time.
So now it's time to see whether the market really thought things were just dandy or whether it just wanted to take the bears to the woodshed for awhile. Stay tuned. It may not be long before we have our answer.
