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%.

.

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.