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Markets Consolidate Huge Advance

5/19/2011 9:23:09 AM

The markets continue to set up very bullish here. Here's our view.

Welcome to Lynn T's 1-2-3 PLUS Alert. To try my Partial Leverage Utilization System, click here.

They say go away in May - that may just be the exact opposite thing you should do.

The way I see the markets setting up here is very bullish. When markets hang up near highs, and don't consolidate too deeply, then they're strong. Plain and simple. Price action is key, news is secondary.

When we decide our leverage position, we have 3 key elements. Currently, we're 2/3 bullish because the markets have held up here. And our last component could trigger next week, meaning we'd move to 3/3 bullish.

What's that mean to you?

Well, it can mean being fully invested, if you don't apply leverage. The name of this service is 1-2-3 Plus - and the Plus means how you apply leverage. For example, in a non leveraged account, you would simply invest 33.3% of your total account value on our position weighting.

However, on a leveraged account, first you pick the leverage level. Say you pick a 2x fund below. Well, 1/3 would be 66%, 2/3 would be 132% and 3/3 would be fully invested - or 200%.

So right now our weighting is 2/3 - using leverage would have you at 132% of the markets return.

So where are we now?

We're not planning on changing a thing. However, we are close to a secondary long term buy signal, which would be great (we're still in our last one). If we get that, that would be a signal to put more money to work.

Accordingly;

Maintain 2/3 bullish position (see weighting below).

SPY Chart

Current Weighting Suggestion:

2/3 in Bullish Leverage
1/3 Cash

Long Term Investor Buy Signal Alert
Over the past several years, this indicator has predicted several 100-point or more moves in the S&P. There are only 2 to 3 of these signals every year, so they're worth paying attention to. This is an ideal signal for investors to put cash to work following a down move in the market.

There is no long term investor buy signal at present. We're still working off the 9/13/2010 signal and it's about as good as it gets. To be honest, I was susprised at this last bottom that the indicator didn't get more bearish and give us a signal. We'll be patient here. These signals offer great opportunity.

Past Long Term Investor Buy Signals

September 13, 2010 - currently active
July 26, 2010 - resulted in an advance of around 20 points over 1 week.
March 18, 2009 - resulted in an advance of around 235 points over 4 months.
October 29, 2008 - resulted in an advance of 76 points over 4 days.
July 23, 2008 - resulted in an advance of 34 points over 3 weeks.

Earn money: refer us to friends and family.

Long Term Investor Crash Warning Indicator
This indicator is a variation of the widely published Hindenburg Omen. We'll let you know when we're seeing indications of a potential crash to come. This would be a good time for long term investors to take some money off the table.

This indicator is not coming into play at this point in time. There are several components that come into play - we'll advise you as we see them come in. If we see them come in.

You can email me with any questions at plus@stockbarometer.com.

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Have a great week!

 

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