TROUBLE AHEAD?

THE TRENDS:  While technically the long term trend remains up, the intermediate term trend has flipped down, which may soon translate into shift down in the long term trend.  Take a look at the weekly SPY chart.  As you can see the week not only closed lower than last week, but it also closed lower than the previous 5 weeks AND below the all important 10 week moving average.  Also, for the 1st time in 5 weeks there are fewer stocks in bullish trends.  This is a very important confirming market breadth indicator that I look at.  NOTE:  From this point forward I'll be posting the weekly chart with price bars colored one of three colors (green, dark red and gray).  If the bars are green, the market is bullish.  If dark red, the market is bearish.  If gray, the market is neutral.

WHAT I WOULD DO LONG TERM:  I would be out 100%.  The intermediate term trend has flipped down.  It is possible that the market may stop and bounce off the 40 week moving average, which is just below price.  If that happens, I would get back in again.  But right now there is a decent probability that the market may decline even further.  Have a HAPPY NEW YEAR!

NOT MUCH PROGRESS

THE TRENDS:  Both the long term and intermediate term trends remain up.  But the weekly price action has me a bit concerned.  Take a look at the weekly SPY chart.  For the third consecutive week prices closed on Friday very near where they opened on Monday.  There is a lot of indecision in the market.  This may be due to the fact that we're very near a major holiday.  However, one of the most important market breadth indicators I look at still points to a very bullish market and prices remain above both of the important moving averages.












WHAT I WOULD DO LONG TERM:  Nothing has changed since last week.  Typically when we encounter the type of indecisive price action I take a certain percentage off the table and get 100% invested again if the market makes a more decisive move up.  Depending on your risk tolerance you may choose to do the same or just stay in 100% until an intermediate term sell signal is given.  HAVE A VERY MERRY CHRISTMAS!

BEARISH WEEK

THE TRENDS:  The long term trend remains up.  So does the intermediate term trend although there are some danger signs.  When looking at the weekly SPY chart you'll notice that prices this week traded higher earlier in the week only to close lower than the previous week and lower than where it opened on Monday.  Based solely on price action this is very bearish.  However, one of the other most important factors I use to confirm an intermediate term trend change is still very bullish. 

WHAT I WOULD TO LONG TERM:  Ideally I like to see all factors pointing up in order to stay 100% invested.  Since that is not the case I would likely take off 50% or so of my position and wait to see what happens next week.  The 10 week and 40 week averages remain very powerful support levels.  If the intermediate trend flips down I'm 100% out.  If it reverses back to the upside, I get back in 100%.  That is the money management strategy I use.  What you do of course is up to you.  Have a great weekend.

STAYING IN

THE TRENDS:  Both the long and intermediate term trends remain up.  As you can see in the weekly SPY chart, it closed higher than last week and above both the important averages (10 and 40 week).  Just as important, although the market closed lower than where it opened on Monday, it rallied late in the week after selling off earlier in the week.  This is typical of bull market behavior.

WHAT I WOULD DO LONG TERM:  I would stay in 100%.  However, I'm watching the longer term charts like a hawk now to look for signs that the market may correct again.  We are nearing the price levels reached in March 2008 where the market tanked over 54% over a 12 month period.  I'll keep you informed.  Have a great weekend!

BACK UP

THE TRENDS:  The long term trend remains up and all the elements I look at support a flip up in the intermediate term trend.  This past week closed higher than the previous week and also above both the 40 week and 10 week moving average.  The probabilities favor a test of the 148 level, which represents the high made in September  One of the reasons I say that is that the last time the chart looked like this was in late June (see circled bar).  As you can see the market ran much higher from that point.  However, it could be that we might only get another week or two of up side before another potential down leg.  I say that because the longer term charts I look at suggest that this market has made quite a run and the closer we get to the 148 level, the probabilities grow that any sell off may result in a longer term correction.

WHAT I WOULD DO IN 401-K:  I would be 100% in mutual funds but would be quick to exit if the intermediate term trend flips back down.  Have a great weekend everyone.

NICE BOUNCE

THE TRENDS:  The long term trend remains intact and at first glance of the weekly SPY chart you may be inclined to believe that maybe the intermediate term trend has resumed to the up side.  The week closed very strongly up right after bouncing off the 40 week moving average.  While the price action itself was very bullish there are still two things that I look that are suggesting that this bounce may be nothing more than a brief rally before a resumption of the trend down.  One of those things is the 10 week moving average (cyan line) which is directly above price and often acts as resistance when the market has been declining from a major high.

WHAT I WOULD TO LONG TERM:  I would still be out 100% of mutual funds in my 401-K until I have full confirmation that an intermediate term rally is underway.  Hope you all had a happy Thanksgiving!

STILL OUT

THE TRENDS:  The long term trend remains up but the intermediate term trend remains firmly down.  This week the market closed lower that last week and just as importantly closed lower than both the 10 week moving average (cyan line) and the 40 week moving average (white line).  SEE IMAGE BELOW.

WHAT I WOULD DO LONG TERM:  Four weeks ago I mentioned that I would move all of my money in mutual funds into cash (see arrow on image).  The most recent price action suggests a further move lower.  Until the intermediate term trend flips up, there is no reason I would commit any funds back into mutual funds.  Have a great weekend everyone.

STILL DOWN

THE TRENDS:  While the long term trend remains up, the intermediate term trend remains decidedly down.  For the past couple of weeks I've been talking about the high likelihood of price declining into the 138 - 140 area.  On Monday the market rallied to touch the 10 week moving average but then sold off to close on Friday at 138.16 below the 40 week moving average at 138.61.

 










WHAT I WOULD DO LONG TERM:  There is ABSOLUTELY no reason to buy at this juncture.  I would keep my powder dry and let the market tell me when it's time to put some chips on the table.  Have a great weekend everyone!

THINGS STILL NEGATIVE

THE TRENDS:  The long term trend remains up but the intermediate term trend remains down.  As you can see from the weekly SPY chart, although the week closed slightly higher than last week, it closed lower than where it opened.  More importantly, during the week price rallied to the 10 week moving average and then declined precipitously on Friday.  This is very bearish.

WHAT I WOULD DO LONG TERM:  IMHO there is absolutely no reason to buy yet.  The recent price action suggests a high probability of a further decline to at least the 138.50 to 140 area.  Have a great weekend! 

IT'S OFFICIAL

THE TRENDS:  While the long term trend remains up the intermediate term trend has turned down.  As you can see on the weekly SPY chart, the week closed below last week but more importantly also closed once again below the 10 week moving average and the high made in April of this year.  The probabilities highly favor a further down move to at least the 138 - 140 level. 

WHAT I WOULD DO LONG TERM:  Nothing has changed since last week.  I would remain 100% out of the stock market until the intermediate term trend flips back up in the direction of the long term trend.  Have a great weekend!

STILL DANGEROUS

THE TRENDS:  The long term trend remains up but the intermediate term outlook is a bit cloudy.  As you can see on the weekly SPY chart this week again closed below the 10 week moving average but not quite below the 142 high made last April.  This price action is VERY bearish.  For most of the week the market rallied only to get slammed on Friday.  The ONLY reason I don't feel 100% confident in declaring the intermediate term trend down is that there is one other important factor that I look at that is still pointing up instead of down.

WHAT I WOULD DO WITH LONG TERM FUNDS:  My stance has not changed since last week.  I would keep all of my money on the sidelines.  There is plenty of time to initiate a new position when the intermediate term trend is firmly pointing up again.  Have a great weekend!

NEGATIVE EXPECTANCY

Sorry about the late update.  Typically I do this in Saturday morning but my wife and I decided to take a day trip to see the fall colors and do some wine tasting. 

THE TRENDS:  While the long term trend remains up a majority of the factors I look at point to a flip down in the intermediate term trend.  On Friday the market closed below the 10 week moving average of 143.61.  It still has not closed below 142.21, which is the only positive sign at this time.  If you look closely at the chart you'll see the April - May 2012 time frame circled.  By the time this pattern completed, the market had already dropped 3% from the April high.  The market then proceeded to drop another 7%.  The pattern we just completed on Friday looks eerily similar.  While all of the factors are not in place to indicate an intermediate term down trend, the probabilities favor a similar drop this time.

WHAT I WOULD DO WITH LONG TERM FUNDS:  With a 401-K I would move a large percentage, if not all of my money into cash.  There's always time to get back in if the intermediate term trend reasserts itself.  The same is true for IRA's.  Enjoy the rest of your weekend!

A BOUNCE

THE TRENDS:  As you can see on the weekly SPY chart the market closed higher than the previous week.  As I mentioned two weeks ago a "normal" correction would end in the 142 - 144 area.  The low was actually made at 142.95 before the rally last week.  Both the intermediate and long term trends remain up.

WHAT I WOULD DO WITH LONG TERM FUNDS:  I see no reason to get out yet.  But I continue to watch the 142 - 143.26 area very closely.  If we get a weekly close in that zone, other factors point to a potential flip in intermediate trend.  Have a great fall weekend!

CORRECTION CONTINUES

THE TRENDS:  Both the long term and intermediate term trends remain up although the intermediate term trend is undergoing what I believe to be a "normal" market retracement.  Last week I mentioned that if another up leg is in the offing, the correction should stop in the 142-144 area.  This week the market closed down for the 2nd straight week but closed at 143.97.  Next week will tell us a lot about the health of the intermediate trend.  If we get a weekly close below 142, there is a very high probability of a move lower, which would flip the intermediate term trend down.

WHAT I WOULD DO WITH LONG TERM FUNDS:  If I were in mutual funds since the last buy signal, I would stay in as the trends are still up.  For self directed IRA's I would stay in an SPY position or call options on the SPY but might sell off 1/2 of my position just to take profits off the table.  Have a great weekend everyone.

CORRECTION UNDERWAY

THE TRENDS:  Both the long and intermediate term trends remain up.  However, as you can see from the image of the weekly SPY, this week closed lower than last week.  It is not unusual to see at least a one or two week correction after such a strong up move.  If this is a normal correction before another up leg in the market, I would expect the retracement to end somewhere in the 142 - 144 area.  The 142 level is an especially strong support level as it represents the high made in April and the 10 week moving average is just below it.

WHAT I WOULD DO WITH LONG TERM FUNDS:  For now I would remain in.  Until the market tells me otherwise this looks like a normal bull market correction.  However, I will be watching the 142 - 144 level closely over the next couple of weeks.  If the market does decline into that area and then bounce, then there is a high probability of another leg up.  Have a great weekend everyone.

ANOTHER STRONG WEEK

THE TRENDS:  Both the long and intermediate term trends remain up.  After last week's breakout above the April high, this week closed even higher, which is very bullish.

WHAT I WOULD DO WITH LONG TERM FUNDS:   With a 401-K I would stay fully invested in mutual funds.  With an IRA I would also stay fully invested in an exchange traded fund like the SPY or call options on the SPY.  The ONLY caution I would have is that after such a large move up in such a short period of time, it is normal to expect a pause or correction in the market.  As always, I'll be watching for signs of a correction and if it does occur, whether or not it's normal or a potential flip in the intermediate term trend.  Have a great weekend!

FINALLY

THE TRENDS:  As you can see from the weekly SPY chart below, this week closed very strongly above last week.  Not only that, but the market finally had a weekly close above the high of 142.21 made in April.  So both the long term and intermediate term trends remain up.

WHAT I WOULD DO WITH LONG TERM FUNDS:  If I still had a 401-K and was limited to mutual funds I would stay in.  But as bullish as this week's breakout was, it is important that there is "follow through" in the weeks to come.  Occasionally these breakouts can fail.  So I'm watching the 10 week moving average as a "line in the sand" that could potentially flip the intermediate term trend down.  This level is currently at 139.58.  Have a great weekend!

STILL A MIXED BAG

THE TRENDS:  The long term trend remains up and on a technical basis so does the intermediate term.  However, I'm defining the intermediate term trend as "neutral".  The reason is that half of the indications I look at point to a trend continuation while the other half say "caution".  As you can see from the weekly SPY chart the week closed slightly lower than last week at 141.16.  This is slightly bearish.

WHAT I'M DOING LONG TERM:  As I shared with you last week I took profits on 1/2 of my position last week and moved my stop on the other 1/2 to 136.08, which is the last intermediate term buy signal.  Due to the cloudy intermediate term outlook I am now moving my stop to just below the 138 level, which is just below the 10 week moving average.  If price declines to that level it will in all likelihood signal an intermediate term down trend.  I hope you all have a great holiday weekend.  Fly your flag with pride!

MIXED BAG

THE TRENDS:  Both the long term and intermediate term trends remain up.  However, there are some early signs that the intermediate term trend may be in jeopardy.  When looking at the chart notice that price briefly exceeded the high in April at 142 only to close lower at 141.51.  The week also closed lower than last Friday.  This is bearish.  The other indicators that I look at are split as to what may happen next.  Ultimately I'll need to see at least a strong weekly close below the 10 week moving average which is currently at 137.98.

WHAT I'M DOING LONG TERM:  As I mentioned last week I took 1/2 of the funds I've committed to long term investing off the table.  I will keep the other 1/2 in the market until I see more signs of a confirmed intermediate term down trend.  Have a great weekend everyone!

BULLISH BUT VIGILANT

THE TRENDS:  Both the long term and intermediate term trends remain up.  As you can see on the Weekly SPY chart the week closed higher than last week and was especially bullish on Friday.  BUT, we need to be vigilant.  Notice the green line drawn at the April high of 142.21 which represents the highest prices have traded this year.  On Friday the market closed at 142.18. 

WHAT I'M DOING WITH LONG TERM FUNDS:  When the market reaches such an important resistance level, rather nasty declines can occur if enough indicators agree.  I will be watching these closely next week.  In my own account, I'm taking profits on 1/2 of my position and on the other half I'll move my stop up to breakeven after commissions.  Have a great weekend everyone!

ALMOST THERE

THE TRENDS:  Both the long term and intermediate term trends remain up.  This week the market closed higher than last week and well above the 10 week moving average.  This is bullish but there wasn't much "range" during the week which concerns me a bit.  As I've stated the last few weeks, the 142 is the high probability target we're looking for the market to reach.  Today the market closed at 140.84.

WHAT I'M DOING WITH LONG TERM FUNDS:  Still in 100% but watching VERY CLOSELY what happens when the market hits the 142 level.  If a confluence of other factors I look at point to a market decline it could be a rather swift one.  Will keep you advised.  Have a great weekend everyone!

SAME OLE SAME OLE

THE TRENDS:  Both the long term and intermediate term trends remain up.  As you can see from the SPY Weekly chart, this week opened at about the same level it closed the previous week.  It then declined to "test" the 10 week moving average, only to rebound later in the week to finish strongly.  Not to sound like a broken record, but this is bullish behavior.  The probabilities are very high that the 142 level will be tested on the up side.  The ONLY issue I have with the up trend is that it is moving up VERY slowly.  I'd like to see more conviction as the market moves higher.

WHAT I'M DOING WITH LONG TERM FUNDS:  I'm still in 100% but will continue to watch very closely for signs of an intermediate sell signal.  Have a great weekend everyone!

NICE!

THE TRENDS:  Both the long term and intermediate term trends remain up.  As you can see in the weekly chart of the SPY, the week started by selling off only to bounce again off the 10 week moving average.  Friday was a particularly strong day which is very bullish.

WHAT I'M DOING WITH LONG TERM FUNDS:  Still in 100%.  The 142 level remains a high probability profit objective based on the latest price action.  But I remain vigilant looking for any reversals that may signal an intermediate term shift to the down side.  Have a blessed weekend everyone!

STILL OK

THE TRENDS:  The long term and intermediate term trends remain up.  As you can see from the chart below, although the market sold off on Friday, it closed higher than where it opened on Monday and higher than last Friday's close.  This is slightly bullish.

WHAT I'M DOING IN 401-K:  Still in 100%.  As I mentioned last week however, the conditions exist whereby if the market closes below the 10 week moving average (which isn't far below price), the intermediate trend could easily flip down.  So I'll keep a close eye.  Have a great weekend everyone!

STRONG WEEK

THE TRENDS:  Both the long term and intermediate term trends remain up.  As you can see in the chart below, this week closed above last week.  But even more important is how the prices traded during the week.  Early in the week prices declined, traded slightly below the 10 week moving average, and then rebounded strongly late in the week to trade above where it opened on Monday.  This is considered to be very bullish behavior.

WHAT I'M DOING WITH LONG TERM FUNDS:  Since both trends remain up, I'm staying 100 invested.  However, we're not to far away from a point where a confluence of events could flip the intermediate trend down.  So I'm watching the market closely.  Hope you all have a great weekend!

A LITTLE CAUSE FOR CONCERN

THE TRENDS:  The long term trend remains up.  The intermediate trend also remains up even though the market closed slightly lower than the previous week (see image of Weekly SPY).  As you can see the market closed at 135.49 above the 10 week moving average which is currently at 133.49.  However, we need to be vigilant and watch price action closely at this juncture.  On the left side of the chart notice the area circled in green.  This is the weekly price action in July of 2011.  The price action is very similar to this year.  Early in July 2011 the market broke out above the average only to decline below it decisively the last week of the month.  The market then had a severe correction phase.

WHAT I'M DOING IN 401-K:  I'm staying in because at this juncture the intermediate trend is up.  However, if the market closes again below the 10 week moving average, the probabilities highly favor a more severe correction.  I hope you all had a great holiday and stay cool this weekend!

BACK IN

THE TRENDS:  The long term trend remains up.  More importantly, on Friday the intermediate term trend flipped back up.  You may remember in past weeks how I talked about how important the 126 - 130 zone was.  If the trend was to re-assert itself to the up side, prices would likely have to stop there.  Not only did prices stop there, but we had a strong weekly close above the 10 week moving average.

WHAT I'M DOING WITH LONG TERM FUNDS:  I am back in 100%.  Last week's price action indicates a high probability that the high of 143 made in late March will be tested.  My ONLY caution at this point is that the 10 week moving average is not yet sloping up.  It is conceivable that after such a strong week we may see some weakness in the short term.  But as long as we don't get a weekly close below the 130 level, the intermediate term trend remains up.  Have a great summer weekend!

NOTHING NEW TO REPORT

THE TRENDS:  As you can see from the chart of the weekly SPY, the market closed lower than it did the previous week.  At the beginning of the week the market rallied above the 10 week moving average only to close below it at the end of the week.  This should prove to you how formidable this average is.  Last summer, after the market declined below this average, it took 11 weeks for the market to rally above it to signal another up leg in the long term bull market.  The long term trend remains up/neutral, but the intermediate term trend remains down.

LONG TERM FUNDS:  I'm on the sidelines until the market breaks decisively above the 10 week moving average.  Have a great weekend everyone!

DITTO

THE TRENDS:  I could literally refer you back to last week's post.  As you can see from the image below, the market closed nearly where it opened for the week and stalled at the 10 week moving average.  As I stated last week, until the market can move strongly above this level, the intermediate term trend remains down.  The long term trend remains bullish to neutral.

SUGGESTION FOR 401-K:  For the reasons stated above I'm remaining 100% on the sidelines until the intermediate term trend flips up.  Have a great weekend everyone.

NOT TIME YET

THE TRENDS:  The long term trend is still neutral.  This week the market closed very strongly above the 130 level, which on it's own was very bullish.  But technically the intermediate trend remains down.  One of the reasons can be seen on the chart below.  Notice the cyan and red line on the chart?  This line is a 10 week moving average.  Now look at the two circled areas on the chart.  These represent the bear markets in the summer of 2010 and summer of 2011.  Notice how a sustained bull trend never got underway until price broke above that line decisively and the line turns cyan.

SUGGESTION FOR 401-K:  I am still out of the market as the intermediate trend has not yet flipped up.  Have a great weekend everyone.

BOMBS AWAY

THE TRENDS:  As you can see from the image below, the market sold off heavily this week compared to last.  It closed below the all important 130 level, which points to a high probability move lower to the 116-120 zone.  The intermediate term trend is decidedly down.  When looking at the monthly chart the long term trend is now neutral.












SUGGESTION FOR 401-K:  There is absolutely NO reason to get back into the market now.  It is conceivable that if next week the market rallies back above the 130 level, that there may be another leg up.  But until that time, I'm staying on the sidelines

Have a great weekend!

NO BIG SURPRISE

THE TRENDS:  The long term trend remains up.  However, the intermediate term trend remains down.  This, even though this market closed up slightly from last week.  As I mentioned last week, there was a reasonable probability that the market would bounce from the 130 level.  But this bounce occurred on weaker volume and range compared to the last week

SUGGESTION FOR 401-K:  Although the market closed up above the 130 level it did so with weak conviction.  The bottom line is that the intermediate term trend is still down and until it flips up I am staying 100% in cash.

Don't forget to fly your flag this weekend in memory of our veterans and loved ones who have passed.  Have a great holiday weekend!

NO DOUBT

THE TRENDS:  While the long term trend remains up there is no doubt about the intermediate trend.  As expected the market moved decidedly lower and on heavier volume than the previous week (see image).  As you can see the market closed right at/near the high made last October.  The market action should be very interesting in the next several weeks.  It is conceivable that this is the level the market will find support for another leg up.  On the other hand, if the market breaks through this level on strong volume, the next down side target is the low made last November.

SUGGESTION FOR 401-K:  There is NOTHING positive right now to suggest getting back into the market.  I'm 100% in cash.  Have a great weekend everyone.  I'm off to go fishing with my buds!

I'M OUT

THE TRENDS:  On Friday the market gave an intermediate sell signal as the market closed below the 137.50 level that I talked about last week.  IMPORTANT:  It also did so on higher volume than the previous week.  This suggests a high probability that over the next several weeks the market will continue to decline, potentially to just below the 130 level, which represents the October, 2011 high.

WHAT I'M DOING IN MY 401K:  I am moving all of my money into cash.  On occasion the kind of action we saw last week will just be a "head fake" where the market turns around and heads back up.  If this happens, I'll get back in but the probabilities suggest a further move down.  Better safe than sorry.

Have a great weekend everyone!

LOOK OUT BELOW?

THE TRENDS:  The intermediate and long term trends remain up.  Although there are definite signs that the intermediate trend may be in peril.  As you can see this past week was very much a down week, this right after a strong week the week before.  The bottom line is that if the market continues to fall below the 135.75 level the intermediate term trend will flip down.  If this happens this indicates a high probability that the market will continue to fall to at least the 130 level, which is near the high made last October.

SUGGESTION FOR 401K:  I will be monitoring the market each day next week.  If it falls below the 135.75 level I'm moving all my long term funds to the sidelines.  I will update the blog if this happens so watch your mailbox.  Have a great weekend.

SO FAR SO GOOD

THE TRENDS:  As you can see from the attached chart of the weekly SPY the market had a very strong week.  Although the 136 level was tested early in the week the market turned around and finished very strong on Friday.  This is very bullish.

SUGGESTION FOR 401-K:  I am fully invested again but although this last week was a very strong week, some of the other indicators I look at to confirm the price action still point to some uncertainty.  I will feel a lot better if the market continues to rally above the 142 level.  I will continue to keep an eye on the charts daily and update the blog if I feel the intermediate term trend has shifted down. 

HOLD ON

THE TRENDS:  The long term trend remains up as well as the intermediate term trend.  As you can see from the weekly SPY chart the week closed slightly higher at 137.95.  More significantly it closed above the high of 137.18 made last May after closing below that level the previous week.

SUGGESTION FOR 401K:  For the time being I will remain invested unless the market makes a rapid decline below the 136 area (green dotted line).  This would mean a high probability move lower which would signal an intermediate term sell signal.  If this occurs I will update the blog so you may want to check your email each day.  Have a great weekend everyone.

WHAT TIME IS IT?

THE TRENDS: As you can see from the attached chart the market declined for the second consecutive week, closing at 137.14 which is just below the significant resistance level representing the high made last May at 137.18. The correction over the last two weeks has been 3.5%. As I mentioned last week, after such an extended up move it is not abnormal to see these types of corrections in a healthy bull market. Both the intermediate and long term trends remain up.



SUGGESTION FOR 401K: I should have mentioned last week that those who had been fully invested in the stock market since the last signal at 115.71 may want to move some of their money into cash since the probability was high that over the next several weeks we may see a market correction. I still believe that we may be in for potentially another couple of down weeks before another potential leg up. So you may still consider moving some of your money into cash. Of course, I will keep an eye out for signs that this correction may actually turn into an intermediate term down trend in which case you would definitely want to move the majority of your money into cash.

Have a great weekend!

NO TIME TO PANIC

THE TRENDS: As you can see from the attached chart of the SPY this past week closed slightly lower than the previous week. This is normal market behavior, especially after the strong rally mode the market has been in since December. My expectation is that this past week will begin a string of weeks where the market declines before the market may bounce and resume it's up trend. If we do see a "normal" pullback, I would expect this bounce to occur somewhere in the 134-137 area. But it could go as low as 132.



SUGGESTION FOR 401-K: I'll reiterate what I've mentioned the past few weeks...if you've been out of the market 100% up until now, I would not commit a large percentage of overall capital at this point. If we get the expected decline I will watch the areas outlined above closely for signs of a bounce that would give a safer time to commit more funds to the market.

Have a great Easter weekend. He is risen!

A DIFFERENT LOOK

THE TRENDS: Since officially the first quarter of the year ended with this Friday's trading I thought it would be interesting to give you a look at a very important chart that I look at when analyzing the long term trends. The image you see below is a quarterly chart of the SPY. Each bar represents 3 months of trading activity and the last bar you see is the trading activity that took place between 1/1/2012 and 3/31/2012. As you can see the last two quarterly bars have been very bullish so the long term up trend remains very much intact.



As you can see the chart spans from 1998 to the present. The main advantage of using a chart like this is that it is easy to get confused by the daily and even weekly fluctuations in price. But when you pull up a monthly or quarterly chart the long term trends become clear. The other major advantage is that long term support and resistance levels become clear. I've pointed out the importance of two such levels on the chart. The bull market which began in 2003 ended at nearly the same level as the previous bull market in 2000 and the bear market which ended in early 2009 ended just below the level of the previous bear market in 2003.

SUGGESTION FOR 401-K: As I pointed out last week, even though the bull market is strong, if you have been out of the market entirely up until now, it is a little risky to throw in 100%. My feeling is that over the next several weeks we will at least get a normal market correction to a support level. If and when that happens we then look for a sign of strength that another up leg will take place. This will offer a lower risk opportunity to participate if there is more up side left.

Have a great weekend!

UNEVENTFUL WEEK

THE TRENDS: As you can see from the attached weekly SPY chart the week closed slightly lower than the previous week and didn't have much of a range. This is typical after a very strong up week. The long term trend and intermediate trends remain up.



SUGGESTION FOR 401-K: As I said last week although the trends are up the market has made a very strong run up from the last intermediate term buy signal. Typically bull market behavior is that we will see at least a 1 - 2 week correction sometime in the next several weeks. So now is not the time to throwing "all in" if you've had all of your money in cash up until now. I will continue to monitor the market daily to look for the type of pullback, then bounce, that would indicate a continuation of the bull market when it will be much safer to get back in. So keep watching your emails each day!

If you have any questions, don't hesitate to ask. Have a great weekend everyone.

Strong Week

THE TRENDS: The long term trend is mildly bullish while the intermediate term trend is strongly up. As you can see from the chart this week was strong compared to the previous week and for the 2nd consecutive week closed above 137.18, which is a formidable resistance area.



SUGGESTION FOR 401-K: If I had been out of the market 100% up until now I would start "dipping my toes" and commit maybe 25 - 33% of my account into mutual funds. The only reason I wouldn't go 100% yet is that typically, at such an important resistance level, we see at least a mild market correction. If a market correction does happen, and it becomes a "larger than normal" correction, then the loss sustained won't be so large. If the market has a shallow retracement followed by strength, then I would commit the rest of my account to mutual funds.

If you've been looking for an opportunity to get back into the market, check your email each day during the next couple of weeks. If and when we get a shallow retracement followed by strength, I will update the blog that night after the close, which will give you the opportunity to get back into the market instead of waiting for the end of week update. Have a great weekend!

GRINDING HIGHER

THE TRENDS: The long term trend is up and the intermediate term trend is up from 115.71. As you can see from the attached image, last week started out selling off the first couple of days but then rallied strongly later in the week to close slightly higher than the previous week. This is bullish market behavior. In bull markets it is very typical to have sell days early in the week only to have the week finish strong. The opposite is true of bear markets. Still, the market is only slightly higher than the major resistance level of 137.18. Anything can happen at these levels, so I'm watching very closely for the events which may signal a potential change in intermediate term trend.



SUGGESTION FOR 401-K: If you've been in the market since my last signal I would stay in. But if you've been out 100%, now is not quite the time to throw in 100%. There is some specific price action that I would like to see in order to do that. I will continue to watch and let you know in the coming weeks when and if that happens.

In the next few weeks I'll be introducing some trading ideas that I will be using to trade funds outside of 401-K's where one typically has more flexibility in terms of what instruments can be invested in. Until then, have a great weekend everyone.

WHAT NEXT?

LONG TERM TREND: As you can see from the weekly SPY chart, last week closed up from the previous week and also barely closed above the May, 2011 high of 137.31. While this is bullish there is a high probability of a severe market correction or even change in the long term trend to down if the right combination of metrics that I use to analyze the market come together.



SUGGESTION FOR 401-K: If you have been out of the market up until now I would not advise getting in at this point.

INTERMEDIATE TERM MODEL: Last week I shared with you a monthly chart of the SPY which showed only two major buy signals and two major sell signals over the last 11 years. If you recall I also drew green circles at those areas between the signals where the market made a larger than normal correction between those major signals. As I shared with you last week the goal of the intermediate term model is two fold: 1) Exit the market whenever the model indicates a high probability of a normal correction. 2) Buy the market again when the model indicates a high probability of the long term up trend resuming. I am proud to say that I've accomplished both goals. The chart below shows the last major buy at 79.52 on 3/31/09. If you would have simply bought at that point and held until Friday's close, your total return would have been 73%. Now take a look at the notations I've made on the chart. These are areas where the intermediate term model would have bought and exited positions since 3/31/09. As you can see the model did a very nice job of getting you out early on the last two market corrections and got you back in early on the next leg up. Bottom line is that if you had timed your entries on the SPY according to this model your overall return would be 111%.

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From this point on I'll update this chart to clearly show the long term and intermediate term trends. If anyone has any questions, don't hesitate to ask. I love talking about the markets. Be blessed everyone.

GETTING REAL CLOSE!

LONG TERM TREND: Not much of a change from last week. As you can see from the attached weekly chart of the SPY the week was up slightly and closed at 136.93, which is just below the high of 137.18 established last May.



SUGGESTION FOR 401-K. Same comments as last week. If you've had all of your money out of the market, now is not the time to jumping in 100%. We are at a critical level right now where we need to watch what the market and let it tell us what it wants to do next. Either we'll see a continuation of the existing long term up trend or if the market moves in the opposite direction there is a high probability of the long term trend shifting down based on the metrics I follow.

LONG TERM MODEL: This week I'm going to share with you a chart of the historical signals on the monthly SPY chart. As you can see there have been two buy signals and two sell signals since November of 2001. We have currently been in a buy signal since March, 2009. From this point forward each time a major buy or sell signal is given I will update this on the chart.



You may be wondering what the green circles are. Whenever you see a green circle below the red line after a sell signal, this represents an area where the market rallied at least 10% before the down trend resumed again. Whenever you see a green circle above the green line after a buy signal, this represents an area where the market declined at least 10% before the up trend resumed again. How beneficial would it be to know that there is a high probability the market will rally at least 10% in a down trend? How beneficial would it be in an up trend to know there is a high probability of a 10% decline? This is what the intermediate term model that I'll be unveiling next week is designed to accomplish. If you have any questions, please don't hesitate to call or email. Have a great week.

GETTING CLOSE...

LONG TERM TREND: We're getting close to the top. As you can see from the attached chart, the market closed up last week at 136.41, just below the high of 137.18 established last May. Although the trend is up/bullish on a long term basis, the majority of metrics that I look at suggest that once the 137 level is hit, the probabilities favor that any market correction could actually be the beginning of another bear market.



SUGGESTION FOR 401-K: If you're currently out of the market this is a particularly risky time to throw all you money into mutual funds. The next few weeks should tell us a lot about which direction the market wants to take.

I'm going to have to delay posting historical signals on the model that I've developed. Technical issues persist but they should be resolved this week. Have a great weekend!

BORING WEEK

LONG TERM TREND: Last week was a pretty uneventful week. When looking at the attached image of the weekly SPY you'll notice that prices made higher highs only to settle slightly lower than the previous week at 134.36. This is not unusual price behavior right after a very strong week up. The trend remains slightly bullish/neutral on a long term basis. I still believe that there is a very high probability that the 137 level will be tested before the market decides what to do next.



SUGGESTION FOR 401-K: I am remaining in the market but would not recommend establishing new positions at this juncture until we see what happens if and when the 137 level is approached. Next week I will start incorporating my model. A few final programming bugs need to be ironed out yet. Have a great weekend everyone!

WHAT A WEEK

LONG TERM TREND: This past week was a very bullish week as you can see from the attached weekly SPY chart. At this juncture the market is slightly bullish on a long term basis. The only reason that I am not fully bullish is that we are fast approaching a major resistance level at 137.18. This is the highest price the SPY reached last May and hasn't been able to breach since.



SUGGESTION FOR 401-K: There is a high probability the market will test the 137.18 level in the ensuing weeks. Until then I'm staying in the market. One of two things will happen if and when that level is tested. Either there will be a breakout above that level which would turn us very bullish on a long term basis or the market will form a double top which should shift back until a slightly bearish mode.

Within the next two weeks I'll start incorporating the timing model that I referred to in last week's post. I'll share historical signals and start providing real time signals as they occur. Until then, have a great week!