Window For a Reversal
7/12/2010 8:39:30 AM
We were long for the best week in a year, but now we’re cautiously looking for a top over the next few days.
We are in the window for a reversal from several areas.
First, seasonality drives higher into 7/22, which also is a 10 week cycle high. 7/26 is a 35 day trading cycle date (but not a 105 day date, whcih is more significant). And our 2010 Forecast called for a 7/10 high and the market moving lower (way lower) into an 8/13 low.
So that is why we’re cautious here. If I see signs of a reversal (like the last signal) be ready for an intra day alert. It’s very important we nail these reverals on a timely basis with the volatility so high.
On to the charts...
Stock Barometer Analysis
We remain in Buy Mode, looking for the markets to move higher, but cautious for an intra day reversal. So stay tuned...
The Stock Barometer is my proprietary market timing system. The direction, slope and level of the Stock Barometer determine our outlook. For example, if the barometer line is moving down, we are in Sell Mode. A Buy or Sell Signal is triggered when the indicator clearly changes direction. Trend and support can override the barometer signals.
Money Management & Stops
To trade this system, there are a few things you need to know and address to control your risk:
- This system targets intermediate term moves, of which even in the best years, there are usually only up to 7 profitable intermediate term moves. The rest of the year will be consolidating moves where this system will experience small losses and gains that offset each other.
- This system will usually result in losing trades more than 50% of the time, even in our best years. The key is being positioned properly for longer term moves when they come.
- Therefore it is vitally important that you apply some form of money management to protect your capital.
- Trading a leveraged index fund will result in more risk, since you cannot set stops and you cannot get out intraday.
Accordingly;
- Make sure you set your stops so that you can lose no more than 2% per trade (based on the QQQQ if you're trading leveraged funds and options with our trading service).
Potential Cycle Reversal Dates
2010 Potential Reversal Dates: 1/19, 1/28, 3/2, 3/23, 4/7, 5/30, 6/10, 6/28, 7/10. We publish dates up to 2 months in advance.
We are in the window for a reversal - from our next key reversal date (7/10) - or next seasonal high period (7/22) or maybe as long as 7/26. Every day makes us a little more cautious.
My Additional timing work is based on numerous cycles and has resulted in the above potential reversal dates. These are not to be confused with the barometer signals or cycle times. However, due to their past accuracy I post the dates here.
2009 Published Reversal Dates: 1/20, 2/11, 3/7, 3/15, 4/8, 4/16, 4/27, 5/7, 6/8, 7/2, 7/17, 9/14, 10/10, 10/24, 11/12, 11/30, 12/9, 12/21, 12/29. 2008 Potential Reversal Dates: 12/31, 1/11, 2/1, 2/13, 3/6, 4/5, 4/22, 5/23, 6/6, 6/27, 7/13, 9/2, 10/3, 10/22, 11/10, 12/11. 2007 Potential Reversal Dates: 1/10, 1/14, 1/27, 1/31, 2/3, 2/17, 3/10, 3/24, 4/21, 5/6, 6/15, 8/29, 10/19, 11/29, 12/13, 12/23, 12/31, 1/11/08. 2006 potential reversal dates: 1/16, 1/30, 2/25, 3/19, 4/8, 5/8, 5/19, 6/6(20), 7/24, 8/20, 8/29, 9/15, 10/11, 11/28. 2005 Potential reversal dates: 12/27, 1/25, 2/16, 3/4, 3/14, 3/29, 4/5, 4/19, 5/2, 6/3, 6/10, 7/13, 7/28, 8/12, 8/30-31, 9/22, 10/4, 11/15, 11/20, 12/16.
Spread Indicators
Use the following spread/momentum indicators to assist in your trading of the QQQQ, GLD, USD, USO and TLT. They are tuned to deliver signals in line with the Stock Barometer and we use them only in determining our overall outlook for the market and for pinpointing market reversals. The level, direction, and position to the zero line are keys in these indicators. For example, direction determines mode and a buy signal 'above zero' is more bullish than a buy signal 'below zero'.
QQQQ Spread Indicator (NASDAQ:QQQQ)
US Dollar Index Spread Indicator (INDEX:DXY)
Bonds Spread Indicator (AMEX:TLT)
OIL Spread Indicator (AMEX:USO)
Supporting Secondary Indicator
Summary of Daily Outlook
We remain in BUY Mode, looking for the market to move higher into mid July. We could be getting close to a top.
I still believe we’ll see a more significant low in August.
I will be in the chat room this morning from 9:30 to 10:30 edt if you have any questions about, well, anything financial.
If you have any questions or comments, email me at Jay@stockbarometer.com.
Regards,
Jay DeVincentis - President - Investment Research Group, Inc.
Founder - www.stockbarometer.com
Important Disclosure
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