Market Timing

Monday, July 16 2012

Two weeks ago (7/2/12) we posted the below entitled "MIPS - Yet Another Trading Range or A New Up-Channel ???"
- the question was basically what kind of "pattern" the market was trading in?

Since then, the market seemed to have answered that question (see the graph immediately below). With higher highs and higher lows over the last 8-9 weeks, the market seems to be in a new "up-channel". If the SPY breaks above $136.20/share in the next few days, the next upside resistance levels will be at about $139, and then at $142/share (about +5% above today's close). It is a little bothersome that the trading volume is still declining when the market is rising. That tells me that it is NOT the big guys that are pushing the market up at this time. But, the little guys still have lots of buying power on the sidelines (i.e., money that is NOT in equities).

As of today's date, all MIPS models are Long (see Current Signals under the "Signals" tab on our homepage). MIPS will guide us in the right direction over time.

<<< Previous post - 7/2/12 >>>

As you look at the two graphs below, you will see either of:
1) Another Trading Range as in Chart #1, or
2) A New Up-Channel as in Chart #2.

Chart #1 - Another trading range, with up-side resistance at 136.2 and downside support at 127.0
- If the SPY breaks thru 136.2 to the upside, we should have a rally
- But, if the SPY fails to break up above 136.2 over the next few days, the SPY will most likely
fall back to 127.0
Chart #1

Chart #2 - An Up-Channel, with higher highs and higher lows
- This market is definitely trending up, so the question really is: "Is this truly a new up-channel?"
- The SPY has been bouncing between 127 and 136 for all of 2012, so it's time the market finds a new trend
- The chart below seems to be indicating that its new direction will be up, but it could easily continue sideways
- So, let's let MIPS tell us what to do and when.
Chart #2

Posted by: Dr. G. Paul Distefano AT 10:06 pm | Permalink | Email