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Taking the Pulse of the Market
06/07/2013 6:15 am EST
While Mike Turner of CycleProphet thinks the market remains bullish, he's hedging his bets...just in case.
Going through my market indicators in Market Forecaster, I have the following observations:
- All four major US indexes have bear trend probability forecasts.
- 50% of the market sectors have bear trend probability forecasts.
My conclusion? Now is not the time to put 100% of your investable funds into bull trend plays. But, this market is too strong to stay out of, either.
I am willing to stay long just because the market has not reversed, but I am reticent to put a lot more money into long positions right now. In fact, I prefer to begin looking at adding some inverse ETFs—but not before I can see the market put in more than a few down days.
I am 50% long and 5% short in the CP Trades portfolio, and will likely stay close to that ratio for this week, pending a market reversal. Oil looks very bearish, so I may put on a short oil play regardless of where the market moves overall.
The investor sentiment Bull-to-Bear ratio continues to support a move higher in the market in the near term, with 4:1 ratio favoring of the bulls.
The composite of signals looks to have bottomed a week ago, and continues to move in a bullish direction. New short-sell signals are flattening a bit, but still in the range that supports the notion that the market is somewhat overbought.
However, the time-cycle probability forecast charts are becoming more and more bearish, with an indication that the market could reverse course at any time and move rather strongly to the downside.
If you believe the market can only go higher, then you must consider the risk of a correction grows with each day of this unstoppable bull cycle. The safer course of action is to stay nimble, small and greedy about profit taking.
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