Tuesday, November 16, 2010


Current market status:  Unhealthy
Today's Signal: Hold
Last Trade: Buy/Long (11/09 & 11/12)

The market experienced a large enough drop today to flip the main status of my model.  However, after such a large run up the past few months, I don't expect the bulls to go down with out a fight, therefore I expect some kind of snap back rally in the very near future.  At that time, I hope to sell my longs and flip short. 1190-1195 is a reasonable target.  Hopefully my model will lead me in the right direction.  It's obvious to see my system has problems during transition periods, but it will do pretty well when a new trend is being established.  As long as we don't go skyrocketing to new highs, we should be ok. 

For comparison's sake, I mentioned earlier today how my system fared in April.  To recap, my system flipped to unhealthy on Apr 27.  There was a sizable rally the following 2 days, with a great exit for trapped longs on Apr 29.  We all know what happened after that.  Additionally, I mentioned that in every case, there was always a lower close below the closing price of the day we switched from healthy to unhealthy (Tuesday).  So if you're considering shorting, lower prices are in our future.  Just watch out for a shakeout rally the next couple days.

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