Tuesday, May 5, 2015

Quick Update, as of May 5 Close

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Summary:  Tuesday's action was strongly down in terms of sustained selling.  While the talking heads will point to a number of reasons, it mostly is irrelevant.  Trade the markets presented and don't try to anticipate the action.

Timer Status:

Both the short-term and intermediate-term timers are in CASH, indicating that I should be 66% in cash.  Note that the long-term timer is close to transitioning to CASH, so we may be oversold and could bounce here OR we're going to continue lower.  There is plenty of room to go lower.

Percent Longs

I've been harping that we needed to "reset" to the green zone as shown above in order to have a valid buy signal (when it occurs).  With today's action we've moved to 40% long-rated stocks in the database, so we're entering a good area.  I'd like to see it lower from here, with a good hook upward when the buying starts.   We're not there right now.

Long-Cash Ratio Table

The left side of the table -- the slopes -- indicates that we're moving lower on a day-over-day basis.  This is not a buying market at the present time.  The row of reds on the right side of the table shows that today's action caused an acceleration downward in the number of stocks moving from LONG to CASH, and again, this is not a buying market.  'Nuff said.

Cumulative Tick

This chart tells us that we should be defensive, not offensive.

Aside from the top plot, which shows that the number of 52-week New Highs is BELOW the number of 52-week New Lows, the lower plot is telling us to stay away from new positions.

The lower trace has a downward-sloping red trace, which is the cumulative tick trace averaged over about 10 days.  This negative slope means that on a day-over-day basis there is far more selling than buying, and hence, not a good entry point.

I'm waiting for the white trace, which is the real-time cumulative tick, to rise above the red cumulative tick trace.  Once this happens we'll start pulling the longer (red) trace upward, and finally, it will have a positive slope.  Until this occurs it's not worth buying this market.


66% cash position is my target.  What's yours?


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