One of the hard lessons in trading markets is overthinking. Last week delivered a message to those i...
The Bear Presents Some Buying Opportunities
08/18/2008 12:00 am EST
James Rohrbach, editor, Investment Models, Inc., finds some relief in a bear market.
It's always important to keep our focus on the RIX (Rohrbach’s proprietary mathematical model used to predict market trends—Editor) numbers. As you can see we are still running positive numbers for both the NYSE and the NASDAQ. We will continue to remain positive about the market until that changes.
Here are the readings for the RIX Indexes so far this week.
8/11/08 8/12/08 8/13/08
NYSE RIX +14.3 +7.1 +2.4
NASDAQ RIX +14.1 +10.1 +10.1
Last Friday, the NYSE RIX was +10.9; the NASDAQ RIX was +8.4.
We are in a Bear Market that could continue for some time. The best that we can do is try to capture some profits in the Bear Market Rallies. I think you can see that the RIX identifies the start of these rallies, but we have no way of knowing how long they will last. Do not ignore any Sell Signals until the market bottoms out and starts a big rally. I don't know when that will be so I will trade every Buy Signal to make sure that I get in early, when the real up move begins.
Last week we had a very volatile market. We had a couple of big up days, and then a big down day.
One good thing about the RIX is it continues to tell us the current trend of the market, and it allows us to shrug off the wild daily action.
It's interesting to see what happened since the last NYSE Sell Signal.
6-10-08 7-31-08 Change % Change
Dow 12.289.76 11,378.02 -911.74 -7.4%
S&P 500 1,358.44 1,267.38 -91.06 -6.7%
ULPIX 58.82 50.82 -8.00 -13.6%
(This is ProFunds UltraBull Investors ETF—Editor)
Those are significant drops in 51 calendar days, but what is really interesting is the fact that if ULPIX should go back to 58.82 from 50.82 it would be an increase of 15.7%. I am not saying that this will happen, but the potential is there. I purchased ULPIX recently at 50.82 because the NYSE RIX issued a Buy Signal. I never know how long a Signal will last, but I never ignore a Signal.
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