Long & Short Mutual Funds Ratio

March 1, 2009 through March 31,2011

 

This chart has not been updated since the January 25,2011 posting...

This chart is from March 2009 to the present...

It is the ratio of the market cap in long funds divided by the market cap in long funds plus the market cap in short funds...

Note that this ratio is currently higher than the level it was in April 2010 before the market corrected into July 2010 and it is currently back at the same level it was in February 2011 before the market corrected into March 2011...

This does not mean that the market has to correct now, it can advance from here, but, we should exercise some caution...

Note that the market will always do what the market wants to do...

It will always try to influence investors to buy near the top and sell near the bottom...

We are still holding our long position from the Trend Following Buy Signal of March 24,2011 and we will wait for a new signal before we reverse our position... 

 

Past performance is not indicative of future results.

Stock Market Comments by Martin Pring

In reviewing old notes, this comment made by Martin Pring was worth publishing here...

This is a paraphase...

The average cyclical Bull market during a secular Bear has been 34 months...
Excluding the three big rallies 1932-1937, 1942-1946 and 2002-2007 the average is 27 months...
Markets alternate, so the long rally of 2002-2007 will probably be followed by a shorter rally than normal...    By Martin Pring...

So, if you add 27 months to the March 2009 bottom you get June 2011.


Past performance is not indicative of future results.

THE BENNER CYCLE, FIBONACCI NUMBERS & THE NUMBER 56

THE BENNER CYCLE, FIBONACCI NUMBERS & THE NUMBER 56 by David McMinn

The full article can be located at:
http://www.davidmcminn.com/pages/brenfib.htm

There are several extremely interesting subjects discussed...
One that I took note of was the 36ysc (year sub-cycles)
It may be a reason why the "Buy and Hold vs Trading in the Stock Market and the 18/36 Year Cycles"... posted on March 18,2011,  worked...

The following web address will take you to another great article on...Fibonacci Time Sequences
http://www.tsing.com/theory/lesson25.htm

To see other Lessons, just change the number in the web address...

New Buy Signal

A new buy signal today...

Trend Following signals will get us on the right side most of the time so we do not have to guess where the market is going, because, we know that the market is going to do whatever it wants to do whenever it wants to do it...
We keep our emotions out of our decision making process when using Trend Following signals...




Past performance is not indicative of future results.

Stock Market Signals Update

Our last signal was a sell signal on February 22,2011...
Just so you know...as of today we are still on this sell signal...
If the signal changes it will be posted here as soon as possible...

For new readers, our trend following signals do NOT catch tops and bottoms...In fact they may even get whipped sawed in a trading range...BUT, they will keep us in trends when they develop...If you look at some older postings on this blog (February22,2011) you will see the performance chart...In less than one year, from April 2010 to February 2011, there were 18 trades, 10 were gains and 8 were losses, and there was a cumulative net gain of 96%...We went long TNA on buy signals and we went long TZA (an inverse ETF) on sell signals...To keep it simple the performance chart is based only on the TNA...
Again this performance is mainly due to the system keeping you in the trade during a trending market...


Past performance is not indicative of future results.

Two Forecast Charts for 2011 vs the Actual Market YTD

The top chart is our Moon chart for 2011...
The second chart is a composite chart...
The third chart is the actual S&P500 YTD...
For many years the Stock Traders Almanac rated each year of the decade from best to worst...
Some years seem to follow the Moon chart best and some years follow the multi-decade composite best...
We prepare both charts and in some cases a few other charts as well, like the Bradley Indicator, and then see which chart the market seems to be following the best...
"So far" for 2011 the stock market seems to be following the multi-decade composite chart...
Don't discount the Moon chart altogether...look at the similar trend changes as compared to the YTD S&P500...

"History doesn't repeat itself, but it does rhyme" - Mark Twain


Past performance is not indicative of future results.

Market Cap as a % of Nominal GDP

TheChartStore.com

See   ---->    http://bit.ly/eNIA2j

http://www.smithers.co.uk/page.php?id=34

Both charts show descending tops since the year 2000...

Also see post on Monday, February 7, 2011

Long Term Cycles, Depressions and Stock Market Bottoms - Part I


Past performance is not indicative of future results.

MMA Comments for the Week Beginning March 21, 2011

http://bit.ly/eqoOpI     <----for full comments for the week of March 21,2011

Written by Raymond Merriman  

Excerpt from - "Short-Term Geocosmics"
The stock market appears to be following the Jupiter cycle very well, as presented in the Forecast 2011 Book.  In this filtering of Jupiter’s transit through the signs going back to the 1870’s, the DJIA tops out around the time it enters Aries (January 22), bottoms around the middle degrees of Aries (within a couple weeks of April 1, which is also very close to the 20-year Jupiter-Saturn opposition of March 28), and rallies again to another top around its ingress into Taurus (June 4). Is the bottom in yet or will it reach a 10% decline? Will it then rally to a new yearly high in early June, or fall short? That will be the subject of this week’s MMA Cycles Report.

Past performance is not indicative of future results.

67 Trading Day (TD) Cycle Highs

This chart was seen on the Raj Times and Cycles blog posted on March 14,2011...
      http://bit.ly/dPHOw3
The 67 TD cycle is roughly equal to a 14 week cycle...
This is very interesting seeing how numerology assisted in the calculation of forecasting highs in the stock market...

Past performance is not indicative of future results.

Investors Are Starting to Get Nervous About the Current Market...

Money Market Funds (MMF) Show Big Deposits This Week...
 (Re: Only One Family of Funds)

When investors get nervous about the markets they make mutual fund switches...
At the March 2009 bottom of the market investors had been switching cash from mutual funds to a  MMF... At March 2009 the MMF deposits had grown to $1.365Bil...
As the stock market advanced to higher levels since the March 2009 bottom, the amount of funds in the MMF started dropping as investors switched their cash from MMF's and put it in to other mutual funds...
When corrections occurred investors got nervous and made switches back to MMF's...
Then when the market continued it's advance investors switched back from MMF's back into mutual funds again...This occurred several times until the latest top in February 2011 while leaving the MMF with $659mil, the lowest amount since March 2009...
So for the last 23 months as the stock market catapulted up the amount of cash in the MMF ratcheted down from $1.365Bil to $659mil...
From the top in February at DJIA 12,391 to the low this week of DJIA 11,667 there was a 724 point swing...
Although the market closed today at DJIA 11,858 investor nervousness was growing and they switched from mutual funds back to the MMF...A total of $233mil was switched to the MMF from mid February 2011 and $186mil occurred this week alone...

Buy and Hold vs Trading…in the Stock Market and the 18/36 Year Cycles

Buy and Hold vs Trading…in the Stock Market and the 18/36 Year Cycles

1910+18yrs = 1928 (buy & hold ends) + 18yrs =1946 (buy and hold starts)

1910 DJIA @ 57 to 1928 DJIA @ 280 = 391%  / 18yrs = 22% , based on the index in the initial year
Compound Annual Growth Rate (CAGR) = 9.25%

Note that in:

1929 the DJIA was @ 400

1932 the DJIA was @ 40

*From 1928 @ DJIA 280 to 1946 @ DJIA 170 was not a buy and hold period…

1946 +18 yrs=1964 (buy and hold ends) + 18yrs=1982 (buy and hold starts)

1946 DJIA @ 170 to 1964 DJIA @ 880 = 417%  / 18yrs = 23% , based on the index in the initial year
Compound Annual Growth Rate (CAGR) = 9.56%
Note that in:

1973 the DJIA was @ 1050

1974 the DJIA  was @ 600

*From 1964 @ DJIA 880 to 1982 @ DJIA 800 was not a buy and hold period…

1982+18yrs = 2000 (buy and hold ends) + 18yrs = 2018 (buy and hold starts)

1982 DJIA @ 800 to 2000 DJIA @ 10,500=1212% / 18yrs=67%, based on the index in the initial year
Compound Annual Growth Rate (CAGR) = 15.38%
Note that in:

2007 the DJIA was @ 14,400

2009 the DJIA was  @  6,500

* The above does not preclude the DJIA from testing the 6,500 bottom of March 2009

*From 2000 @ DJIA 10,500 and forecast to 2018 @ DJIA forecast at 9,500 forecast not to be a buy and hold period…

2018   +   18yrs   =   2036 (buy and hold ends)

Forecast 2018 DJIA @ forecast 9,500 to forecast 2036 DJIA @ forecast 47,500 = 400% = avg of 22% per year (forecast based on the first and second scenarios above)
Forecast Compound Annual Growth Rate (CAGR) = 9.25%

Although the above 18/36 year cycles forecast calls for the next Buy and Hold period to start in 2018, we are forecasting other projected bottoms to occur in 2014 and 2016...

In summary, there were periods where Buy and Hold of equities performed very well and there were periods where Buy and Hold of equities was not the preferred asset class  investment...
During the Buy and Hold period equities were the asset of choice...
During the Non-Buy and Hold period Gold was one asset of choice...
In the current Non-Buy and Hold period (2000-2018), so far, Gold has also been the asset of choice...

Past performance is not indicative of future results.

12,400 -- An Important Level the Dow Hasn't Broken

This chart was created by the people at Elliott Wave International...

An interesting article about this chart can be found at:

http://bit.ly/gTsS93


Past performance is not indicative of future results.

SPX vs McClellan Summation

SPX vs McClellan Summation 2010-2011

Note the rising tops in the SPX while the McClellan Summation has declining tops (pink line)

NYSE  vs McClellan Summation 2001

This chart was on the McClellan Financial Publication website...Note that the pattern of the McClellan Summation for 2010-2011 is very similar to the 2001 chart...In 2001 the market finished the pattern with a September 2001 sell off...

How will the 2010-2011 pattern be resolved?

Past performance is not indicative of future results.

Market Update

On March 10th we wrote:
The SPX broke out of the triangle to the downside and we are now challenging the 55 DMA...
and it looks similar to late November early December...But is it?
Seeing two options here...One, we find some support and turn up and the rally continues or, two, we find support, turn up and we bounce off of the lower triangle trend channel and continue going down...

Based on our previous posts of a correction in March, today we are favoring the latter scenario...Let's watch and see how the pattern develops...

Today:
We now know that we broke through the 55 DMA and we did not bounce off of it...

From our previous post suggesting a correction in to the end of March +/- and then a rally in to Mid May +/-...We still think that this is possible...Also possible is a bounce from wherever this pullback finds support...

As discussed several times, trying to forecast what the market will do and when it will do it is a blast especially if it turns out right...But the market will do what ever it wants to do when ever it wants to do it...So I still prefer to use Trend following signals to buy and sell the market...Trend Following does not pick tops and bottoms and occasionally can get whip sawed when in a trading range...But when in a trending market it will keep you in the trend...

Note that our last signal was a sell signal on February 22,2011...


Past performance is not indicative of future results.

Today's Chart of the S&P500

On March 8th we wrote:
On today's chart of the S&P500, it looks like a triangle is forming...
With our signals still on a sell signal, it is possible that resistance maybe held at the upper trend line of the triangle and will continue down out of or near the apex...
If the break out is to the upside AND our signals reverse from short to long we will reverse our position and go long...

Today the SPX broke out of the triangle to the downside and we are now challenging the 55 DMA...
and it looks similar to late November early December...But is it?
Seeing two options here...One, we find some support and turn up and the rally continues or, two, we find support, turn up and we bounce off of the lower triangle trend channel and continue going down...

Based on our previous posts of a correction in March, today we are favoring the latter scenario...Let's watch and see how the pattern develops...


Past performance is not indicative of future results.

'Astounding' Trading Accuracy Using Twitter

Interesting article yesterday on the CNBC website...

http://bit.ly/fV9ipa

After you read this article then re-read the following sentence taken from the "When Your Money Is the Dumb Money" article...See the March 8,2011 post...

"I know, I know. Believing that we can remove all emotion from our decision making just isn't realistic."

Mmmm...Individuals mood swings are being read via Twitter and with a 3-4 day offset is being used to predict the movement in the stock market ...

The NYSE is the largest arena that displays human emotions...

So, if you do not have access to this information, take the emotion out of trading by using Trend Following to trade the market...


Past performance is not indicative of future results.

NYT...When Your Money Is the Dumb Money

Interesting article on Yahoo! Finance today from the March 7,2011 New York Times...

http://yhoo.it/dYKZ2B

It is short, so take a minute and please read it...

The Precious Metals posts on this blog have mentioned that when large redemptions were made in the PM mutual fund that PM prices bottomed in that time frame and then reversed direction...So individuals sold this PM mutual fund at the wrong time...Sure, they will get back in, but, probably at higher prices...

Past performance is not indicative of future results.

Todays Chart of the S&P500

On today's chart of the S&P500, it looks like a triangle is forming...
With our signals still on a sell signal, it is possible that resistance maybe held at the upper trend line of the triangle and will continue down out of or near the apex...
If the break out is to the upside AND our signals reverse from short to long we will reverse our position and go long...

Past performance is not indicative of future results.

Precious Metals Comments

On the top is a chart of GLD...
Below it is an oscillator...
Take a look at the oscillator in January 2011...It is oversold at -80...
Take a closer look and you will see the oscillator turning up while the price made a new low...
This is positive divergence which is bullish...

Note that after large January 2011 redemptions in the PM mutual fund, see posts on February 18,2011,  the fund dropped to about $125mil from about $250mil...the price of GLD bottomed a couple of days later at 127.80 and today it closed at 139.91...
Fear took over when GLD dropped from 139.00 in December 2010 to 128.00 in January 2011...So the fund was sold at the wrong time...
Using the oscillator together with the large redemptions of the PM fund told the story for GLD...
Today the PM fund is $150mil...


Past performance is not indicative of future results.

Commentary on the Market Signals

The last signal was a sell signal on February 22nd...
We were close to a reversal today, but, we did not get one...
Even if our forecast on February 27th is ultimately correct or not, it does not matter as long as we religiously follow our signals...
We do not want to get caught up in the emotional volatility swings of the market...This is when it is easy to let our emotions of fear and greed take over our trading instead of letting our signals do the job they were created to do...

To review our strategy:
JustSignals only trades based on the signals...
That is our trigger to take a position and our stop when the signal reverses...
We then sell our current position and take a new position in the direction of the new signal...

Making forecasts are a blast, especially if they come out right, but, we should not get fixated on future changes in trends or price targets that are forecasted...They may not come to fruition...


Past performance is not indicative of future results.