Now the focus shifts to looking for a bottom. Here are my thoughts. First off, I fully believe we'll see new recovery highs, or at the very least, a double top. There was too much strength before the crash, with New Highs vs. New Lows being very bullish. With that said, going long right now wouldn't be a terrible thing, but I think there is a better price to be had.
I will be looking for any of the following things to happen before going 100% S in my TSP.
1) A lower low on the SPX with a higher CCI value. This is strong bullish divergence... (See Early February.)
2) 2 consecutive green candles above the lower bollinger band.
3) A bounce off the cyan line which connects all the way back to the 2007 and 2008 peaks. Look how we bounced off back in February.
If we do retest April highs, there is a good chance the large cap stocks will outperform the small caps. I think when the bottom occurs, I will be looking to go into C rather than S. If indeed the C outperforms the S, the next top will likely be a major cycle top.
ReplyDelete