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Market Timing

Monday, August 24 2020
The S&P 500 Index (and the SPY) broke above their All-Time High (ATH) last week (graph below). From here, we can expect more upside; but this market is now way overbought by just a handful of high tech stocks like the so-called FAANNG (Facebook, Apple, Amazon, Nevida, NetFlex, Google), Microsoft, TESLA, and 10-20 others. The markets are in a situation where a relative few stocks in the indices (less than 20%) are valued above all of the other 80% combined.  One day, investors will realize that this move upward has run out of steam, and a pull-back (or even a correction) will happen soon thereafter.  When?  Well we need to rely on MIPS to tell us when we should remain Long and when to "Get Out".

Paul Distefano, PhD
Founder / Lead Developer
MIPS Timing Systems, LLC
Houston, TX
Posted by: Dr. G. Paul Distefano AT 12:34 am   |  Permalink   |  Email
Monday, August 17 2020

See the graph below. On the top right, you will see that the SPY has been within "breaking distance" (less than 1.5%) of its all-time high (ATH) for the last 5 trading days. Normally, the longer it takes the SPY to break above its ATH, the stronger the break to the upside will be. 

 As always though, if the SPY fails to break above its all-time after like over 10-12 days, it could head south at a rapid pace into "correction" territory. There are times, however, when the SPY breaks above and below its ATH a few times before it makes up its mind on which way to go for the long term.

This is a very complicated period in the market, so we should wait until MIPS tells us what to do next.!!!
- MIPS is still long and strong at this time...
Paul Distefano, PhD
Founder / Lead Developer
MIPS Timing Systems, LLC
408-234-8348 (Cell)
Posted by: Dr. G. Paul Distefano AT 09:49 pm   |  Permalink   |  Email
Thursday, August 06 2020
In a previous Blog (see "Previous Blog" below), we showed "The Gap" that the market (S&P 500) would have to go through to reach new highs.  In the graph immediately below, we can see that the SPY did just that in short order this week as it broke out of "The Gap" to the upside today. Now, the SP 500 is only about 1.5% from its all time high.   Read on...

I think the big question now is "where will the market go from here in the short-term if it moves into new all time high territory?"  Usually when markets approach new highs from a big distance below, they "stall" and test above and below the old new high for several weeks.  Even considering the above, at this time, there is nothing to stand in the way of the market plowing through at the rate that it has been going. 

As we all must know by now, almost all of the recent upside movement in the market has come from less than 10% of the total stocks in the SPY and QQQ.  And, a large portion of these has come  from the FAANG stocks, Microsoft, and a few more (FB, AAPL, AMZN, NVDA, NFLX, GOOG, MSFT, and a handful more).  Of course, these stocks are now way overbought, and any disturbance here now could start a major sell-off and correction.

And remember, quantitative models classify markets as Up or Down by its movements, momentum, trends, etc and they DO
NOT need to know (or analyze) why. Quantitative models predict market directions from market movements, applied mathematics, predictive analytics, artificial intelligence, etc (and not solely from earnings, debt, PE ratios, etc).

MIPS is most valuable in markets like this by keeping us Long while the market is still going up, and getting us into Cash (or Short) if and when the market is falling.

Good trading...
Paul Distefano, PhD
Founder / Lead Developer
MIPS Timing Systems, LLC
Posted by: Dr. G. Paul Distefano AT 09:49 pm   |  Permalink   |  Email

MIPS Timing Systems
P.O. Box 925214
Houston, TX  77292

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