1/31/2009 9:51:25 AM
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Here's how we see the next two weeks playing out.
Stock Barometer Analysis
We have a Sell Signal, placing us in Sell Mode.
The Stock Barometer is my proprietary market timing system. The direction, slope and level of the Stock Barometer determine our outlook. For example, if the barometer line is moving down, we are in Sell Mode. A Buy or Sell Signal is triggered when the indicator clearly changes direction. Trend and support can override the barometer signals.
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Stock Barometer Cycle Time
Monday is day 1 in our Down Cycle.
The Stock Barometer signals follow 5, 8, 13, 21 and sometimes 34 day Fibonacci cycles that balance with 'normal' market cycles. Knowing where you are in the current market cycle is important in deciding how long you expect to maintain a position.
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Potential Cycle Reversal Dates
2009 Potential Reversal Dates: 1/20, 2/11, 3/7, 3/15. We publish these dates up to 2 months in advance.
We're now looking for the markets to move lower into 2/11. We've also added two more dates to plan your future trades.
My Additional timing work is based on numerous cycles and has resulted in the above potential reversal dates. These are not to be confused with the barometer signals or cycle times. However, due to their past accuracy I post the dates here.
2008 Potential Reversal Dates: 12/31, 1/11, 2/1, 2/13, 3/6, 4/5, 4/22, 5/23, 6/6, 6/27, 7/13, 9/2, 10/3, 10/22, 11/10, 12/11. 2007 Potential Reversal Dates: 1/10, 1/14, 1/27, 1/31, 2/3, 2/17, 3/10, 3/24, 4/21, 5/6, 6/15, 8/29, 10/19, 11/29, 12/13, 12/23, 12/31, 1/11/08. 2006 potential reversal dates: 1/16, 1/30, 2/25, 3/19, 4/8, 5/8, 5/19, 6/6(20), 7/24, 8/20, 8/29, 9/15, 10/11, 11/28. 2005 Potential reversal dates: 12/27, 1/25, 2/16, 3/4, 3/14, 3/29, 4/5, 4/19, 5/2, 6/3, 6/10, 7/13, 7/28, 8/12, 8/30-31, 9/22, 10/4, 11/15, 11/20, 12/16.
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Use the following spread/momentum indicators to assist in your trading of the QQQQ, GLD, USD, USO and TLT. They are tuned to deliver signals in line with the Stock Barometer and we use them only in determining our overall outlook for the market and for pinpointing market reversals. The level, direction, and position to the zero line are keys in these indicators. For example, direction determines mode and a buy signal 'above zero' is more bullish than a buy signal 'below zero'.
QQQQ Spread Indicator (NASDAQ:QQQQ)
The QQQQ Spread Indicator will yield its own buy and sell signals that may be different from the Stock Barometer. It's meant to give us an idea of the next turn in the market.
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Supporting Secondary Indicator
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Summary of Daily Outlook
We have a Sell Signal, placing us in Sell Mode. We are looking for the markets to move lower into 2/11.
The above chart of the equity put call ratio shows the complacency in the market. Too bullish to support a continuation of any rally, so these last two days of selling are likely to continue - although in the short term (i.e. Monday) there could be a bounce, which I always prefer since it will get us out of our positions in a little better position.
Here's a chart of the Qs which show my view of how this retest will play out. The good news is that if we do the retest now, there's less of a need to do it later in the year. I still see a move higher following the retest, but I'll continue to focus only on the next move, and not one later on in the year.
The blue lines on the chart are new - I've added them to show where we entered our Q position (the lower blue line, since we enter at the open) and our Rydex position, since we enter that position on the close. These serve as a reality check as we don't want our losses to get away from us.
The issue with this last trade was poor entry and lack of follow through following the trade (in hindsight). Obviously best case scenario is the market moves sharply in one direction following the call, but a sideways move is what we got, with some choppy moves higher and then lower. A better entry would have allowed us to react better to following moves to try and grab some profits from the short term moves.
If you have any questions or comments, email me at Jay@stockbarometer.com.