5 replies to this topic

[dcengr]

This signal has been 68% positive going back to 1999, 48 winners, 22 losers. Avg gain 1.5%, avg loss -1.65%. This is all price/momentum based signals generated by my system. 68% win rate does not equal 100% win rate. I have other evidence that points more towards downside than upside at this juncture, but the huge # of fully short in the polls is a big flashing red light. FWIW...

[ogm]

... but the huge # of fully short in the polls is a big flashing red light.

FWIW...

Incredible, isn't it ? One day they will be right, of course.

[dcengr]

One can't make a decision based on a single poll result. There's a lot of evidence I'm looking at that says sentiment is very frothy right now.. AAII, blogger poll, equity P/C, small contract options players, NDX large/small trader long positions.. But sentiment can remain very bullish a long time before price reaction starts. For better or for worse, few other guidelines I'm using at the moment are price fractals, of which there are several really good matches, more pointing towards downside than upside.. Plus some negative seasonality coming up.. Plus a few other things.. all of which have never stopped price from going higher in the past, but all I can deal with is odds, not certainty. I wouldn't be surprised if SPX makes a nominal new high here.. some of the fractals suggests that can happen.

[ogm]

I don't think aside from short term readings in a couple indicators that the big picture sentiment has really changed. Even the sentiment trader is as neutral as it gets. Yes, bears got burned here. But the end of the world is still widely expected. It was simply "delayed" by yet another "bogus" rally, which is destined to fail any day now because of (insert your reason here). There has been no real capitulation. No real exhuberance aside from chasing a few china stocks. Everyone is still shying US stocks like a plague. Recession fear is still hanging over the market. 30 points off the DOW highs.

[arbman]

ogm, this rally is driven by the liquidity injected and the free money offered by the Fed, but the inflation is low and the growth seems to be picking up in response to the injections, so the stock market rally is mostly justified... BTW, dcengr how did you get a weekly signal before a daily signal?!?

[dcengr]

BTW, dcengr how did you get a weekly signal before a daily signal?!?

The daily signal is a short term signal.. its only good for a few days. Weekly signal says weekly close bar will be lower than when the signal was given..

So its possible to have a few daily signals while the weekly signal turns around. Again, the weekly signal is a long term trading signal, so its possible the market can go up for a few weeks before it heads down. Its best to start small and scale if you have the balls.