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!