Today's Market
by Dr Invest

There are really no real changes in the market to report. Now is not the time to be in the market. Sure, we have seen a dramatic rise in the market this week, only to see the market dramatically fall the past two days. This kind of cycling, up and then down, simply shows that the Bull Trend is getting a bit tired.

Andrew Horowitz pointed out that the Spearman Indicator is revealing these signs of weakness and that a downturn is eminent.

From the chart below, there is confirmation by the Bloomberg Trend/Stall study that a near-term high was reached and now a stalling condition is present. The Spearman is also rolling down. Now to get a confirmation, the Spearman needs to dip below the zero line.

That may occur with a couple of more stall days or a turn sharply lower (greater than 1%) on the S&P 500 index. That may be a time to either hedge out or consider lightening up long positions. From there, a short could be implemented through an ETF or options strategy.

Just a quick heads up….

The Bloomberg Trend/Stall Indicator:

TrendStall identifies points at which a trend is losing momentum and is likely to stall or consolidate. The determination is based on a Rate of Change of the ADX. The parameters for the ADX, Rate of Change, and Moving Average of the Rate of Change are user adjustable.

The bar that has been determined to be the ‘Stall’ point is marked by a triangle above or below that bar. The price bars leading up to a TrendStall signal are painted a different color to alert the user that the TrendStall histogram has risen above the threshold level confirming a trend is in place and a stall is imminent. The period after the stall bar may also be painted on the price chart, depending on the value of the histogram (ADX ROC) in relation to a moving average of that value. This ‘paintbar’ period is often valuable as an indication of a slightly longer stall confirmation.

So what is the Spearman Indicator telling us? At least to Andrew Horowitz, we will enter a downtrend in the weeks ahead. This is really all that you need to know, the future doesn't appear bright and investing at this time will be into a "sucker's market".

Knowing that the best season for investment starts in November, I am reluctant to invest at this time. My prediction is that the market will move downward; but even if it doesn't, the best time to invest will be this fall.

I can't assure the validity of the Spearman Indicator but I will be watching to see if the market turns downward as predicted. My wife recently asked, "Why aren't we in the market since it is doing so well." There is a pressure to make your money work, but the potential risk is too high.  Rule number one.... "Don't loose money!"  This is the objective, to assure that your minimize risk and maximize your return.

Loosing sight of the objective puts your entire portfolio at risk.  Buying at the "right time" gets your portfolio invested with some profit to spare, so you can handle a 10% or 15% loss and still make a profit. Be patient, you will make money.

(note: For entertainment purposes only, not to be used a investment advice.)