More Shorting Opportunities For Bears

Mike Turner |

All four of the major U.S. Indexes (S&P 500, DJIA, Nasdaq and Russell 2000) are indicating a down week in the market. The Turner Oscillator (more on this below) is issuing a market correction warning. Emerging Markets have a very bearish forecast that lasts into the end of the year. The China forecast is bearish into the end of the year.

The forecasts have been indicating a sell-off into mid-November for months. As you can see in the chart above, that sell-off is still being forecast. As you will see below, I am selling short into this forecast trend this week.

On another front, the IEV (European Index) looks bearish this week (see below), but starting late in the week and on into next year, the forecast looks strongly bullish. This nicely coincides with a more bullish end-of-year forecast trend in US markets than indicated from last week's forecasts.

With all the turmoil ongoing in Europe and the 'As-the-World-Turns' drama unfolding regarding which sovereign nation will next teeter on the edge of financial default, it seems more than odd that the European market would have a strong move higher in late November and December... but, that is what the time-cycle forecasts show.

Of course, time-cycle analysis is oblivious to the machinations of current events, except when exogenous events occur and trigger inversion forecasts. The beauty of this form of forecast analysis is the fact that time cycles are immutable and never changing. Time cycle forecasts are, on many occasions, uncannily accurate. Could this be one of those times? As for me, I am not willing to bet [yet] that the forecasts are wrong about Europe, but I do plan to take a wait-and-see attitude before putting money to work on the long side with regard to the European market.

My trading strategy this week is:

Of course, the above strategies are subject to change based on evolving market conditions.

Even though I distinctly remember that the Elves did not want to give me their forecast for last week, they are now running around proclaiming they, once again, "nailed the market". I for one, would like to nail some of their Elf shoes to the floor as they continually disrupt the real work done here regarding money management, trading and forecasting. Promising to put my hammer and nails down, they did offer the following: "The Bull-to-Bear ratio is 1.4-to-1 in favor of the Bulls. The market continues to be in an overbought condition, but appears to have bottomed in that regard. The Composite Total of Signals (black line) has crossed the red line, which almost always signals a move lower in the broader market. The S&P 500 (green shaded area) looks to be in a topping action and may be getting ready to move lower. Taking profits and considering short strategies is recommended. Note the Bull/Bear Rating has dropped significantly from a [+5] to a [+1]. Long positions could be in jeopardy."




So... I asked them... Are you or are you not bearish? Indignantly, as they looked down their very blue noses, they said that conclusion was obvious and huffed off. Since Elves pride themselves on their 'huffiness', I was glad to see them leave the office.

With my time-cycle charts forecasting a down week and the Elves forecasting a down week, I plan to get some short plays in place early tomorrow morning. I am looking at some of the "Weekly Options" and if the premiums are as attractive in the morning as they were on Friday, I may be putting several trades in play.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not necessarily represent the views of Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to:

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