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.
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.
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:
- Short the US market, only for this week. Bearish trends are forecast for Materials, Energy, Industrials, Tech, Consumer Staples, Utilities, Healthcare and Consumer Discretionary, including all 4 of the major US indexes.
- Overall investment objective for the upcoming week: 5% gold, 20% short, 10% long, 65% cash.
Of course, the above strategies are subject to change based on evolving market conditions.
Can There Be Anything Worse Than An Arrogant Elf?
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.”
|Investor Sentiment Forecast
For the Upcoming Week
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.