An Update on My Sell Signals
By Jeff Clark
June 11, 2009
Four weeks ago, two of my most reliable intermediate-term indicators flashed "sell" signals.
The market responded by declining immediately. The sell signals appeared to time the market almost perfectly, and we carved another notch on the bedpost of technical analysis.
Ah, but the market is never quite so accommodating. Despite the initial decline in favor of the sell signals, the market has since recovered. The S&P 500 is actually trading higher than where it was four weeks ago.
Which prompted one reader to ask me recently, "What happened to the sell signal?"
Here's what we're looking at...
The Nasdaq and New York Stock Exchange summation indexes are intermediate-term momentum indicators. The blue circles on the charts indicate sell signals, which occur as the indexes roll over and the short-term moving average convergence divergence (MACD) crosses under the longer-term MACD.
I know it sounds complicated. But it really isn't. Basically, we just wait for the index charts to turn down, and for the little black line on the bottom chart to cross underneath the little red line. Voila – a sell signal...
And the sell signal that triggered four weeks ago now looks remarkably similar to the one that triggered in January.
In January, the summation index sell signals occurred when the S&P 500 was trading around 860. The index traded within about 30 points of that level for most of the next month, then dropped 200 points within a couple weeks.
It has been nearly one month since we trigged the most recent sell signals. The S&P has been confined to a trading range of about 40 points, and the summation indexes look ready to turn back lower.
If history is any sort of a guide, then the market should be ready to kick off a decline similar to what we saw back in February and March. That'll be tough for many of the recent bulls to sit through.
But it'll be tremendously profitable for folks who short stocks at the right time.
Best regards and good trading,
Jeff Clark |
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| • |
Oil breaks out to six-month high... indicators in "overbought" territory. |
| • |
U.S. borrowing costs keep rising... 10-year bond yield inches to highest level since October. |
| • |
The downtrend in beef continues... cattle ETF hits another 52-week low. |
| • |
Earnings today... Del Monte, National Semiconductor. |
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Last |
Change |
52-Wk |
| S&P 500 |
939.15 |
-0.35% |
-30.87% |
| Oil (USO) |
38.97 |
+2.04% |
-63.59% |
| Gold (GLD) |
93.86 |
+0.03% |
+9.71% |
| Silver (SLV) |
15.01 |
-0.13% |
-8.70% |
| U.S. Dollar |
80.83 |
+0.18% |
+11.72% |
| Euro |
1.40 |
+0.16% |
-9.99% |
| VIX |
28.46 |
+0.67% |
+22.78% |
| HUI |
362.28 |
-0.78% |
-11.11% |
| 10-Year Yield |
3.94% |
0.08 |
-0.16 |
|
| Company |
Sym |
Industry |
Universal Travel |
UTA |
travel agency |
Atlantic Tele-Net |
ATNI |
telecom |
Riverbed Tech |
RVBD |
networks |
Rackspace |
RAX |
networks |
Spartan Motors |
SPAR |
trucks |
Tessera Tech |
TSRA |
semiconductors |
Lumber Liquidators |
LL |
lumber |
Orthovita |
VITA |
medical devices |
Synaptics |
SYNA |
software |
NetEase |
NTES |
online community |
URS Corp |
URS |
construction |
Wonder Auto |
WATG |
auto parts |
ICU Medical |
ICUI |
medical devices |
VistaPrint |
VPRT |
online printing |
American Dairy |
ADY |
dairy products |
ShoreTel |
SHOR |
telecom |
TiVo |
TIVO |
electronics |
3Com |
COMS |
networks |
HDFC Bank |
HDB |
bank |
Rubicon Minerals |
RBY |
industrial materials |
Calumet |
CLMT |
oil & gas |
Starent Networks |
STAR |
networks |
Allied Nevada |
ANV |
mining |
MYR Group |
MYRG |
construction |
Arris Group |
ARRS |
telecom |
|
| Company |
Sym |
Industry |
Alto Palermo |
APSA |
property mgm't |
Chemgenex |
CXSP |
biotech |
Pharmaxis |
PXSL |
biotech |
OSI Pharma |
OSIP |
biotech |
Western Goldfields |
WGW |
mining |
Susquehanna |
SUSQ |
bank |
Hadera Paper |
AIP |
paper products |
S&T Bancorp |
STBA |
bank |
Coeur D'Alene |
CDE |
mining |
National Penn |
NPBC |
bank |
Skilled Healthcare |
SKH |
health care |
Pacific Capital |
PCBC |
bank |
|
|
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