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Stock Barometer

Stock Barometer

Stock Barometer

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A Beautiful Set Up

5/23/2011 8:10:01 AM

While the world didn't end on 5/21, there may have been something to it...

Ok, now that I have your attention, here's what I mean. I've been studying the markets for a long time. And I don't mean just looking at stock charts. I mean looking at EVERYTHING that traders look at and talk about and analyzing them to see if I should consider them in my strategy. So over the past decade, I've studied a lot of interesting things, but the most interesting thing is...

The stars... Yes, as some of you know, there is a group of market timers out there that utilize astral indicators in their work. So several years ago, I analyzed and followed their work. And what I found is that sometimes, it is the most accurate thing I have ever seen. So yes, I follow it. But why is that important?

Well, 5/21 - the day that the world was supposed to end, was also a key astro turning date, which we incorporate into our key reversal dates below. Now there are a LOT of cycles that go into timing bottoms and tops, but I just want you to know that 5/21 was a date we've been looking for a low.

Now there are a couple of things you need to know about following astro turning dates - one of those is the accuracy is +/- 2 days. And they are turn dates - there is no alternating cycle, so you don't know ahead of time if it's going to be a low or a high. We just use our other indicators to give the highest probability outcome.

And that's why I'm leaning towards the stock market putting in a bottom here or at least by Wednesday. That's why I think now is a critical time to be watching the market. As I run a stock service and an option service, I have been spending more time readying for some recommendations. And as soon as I get the signal, I'll push the trigger on some recommendations.

And personally I'll also be putting some money to work. As a professional trader too, I don't trade all the time. I trade when the conditions are right. And they are very close to being right. Remember the market is like a rubber band, the more it stretches one way, the more it wants to pull back. Sure, sometimes if you pull it too hard, it can snap in your hands and cause you some pain. But normally, the market will comply with the rule of elasticity...

Here is our view of Global Markets.

World Stock Market View

On the economic front, here is the schedule for this week. There are no reports today...

Weekly Economic Calendar

On to the charts:

Stock Market Timing


Stock Barometer Analysis

The barometer has ticked up, but we remain in Sell Mode as price action remains weak.

I still believe we're close to a buy signal, but I will be patient here for the market to test lows and potentially set up a tradeable bottom in the next day or so.

The Stock Barometer is my proprietary market timing system. The direction, slope and level of the Stock Barometer determine our outlook. For example, if the barometer line is moving down, we are in Sell Mode. A Buy or Sell Signal is triggered when the indicator clearly changes direction. Trend and support can override the barometer signals.


Money Management & Stops

To trade this system, there are a few things you need to know and address to control your risk:

  • This system targets intermediate term moves, of which even in the best years, there are usually only up to 7 profitable intermediate term moves. The rest of the year will be consolidating moves where this system will experience small losses and gains that offset each other.
  • This system will usually result in losing trades more than 50% of the time, even in our best years. The key is being positioned properly for longer term moves when they come.
  • Therefore it is vitally important that you apply some form of money management to protect your capital.
  • Trading a leveraged index fund will result in more risk, since you cannot set stops and you cannot get out intraday.

Accordingly;

  • Make sure you set your stops so that you can lose no more than 2% per trade (based on the QQQQ if you're trading leveraged funds and options with our trading service).


Potential Cycle Reversal Dates

2011 Potential Reversal Dates: 1/15, 1/29, 2/16, 3/10, 3/18, 4/6, 5/21, 5/31, 6/13, 6/24. We publish dates up to 2 months in advance.

With our 9 month cycle low on 5/18, a key reversal date of 5/21 and a 35 day trading cycle date of 5/24, we are in a window for a reversal.

As I said last week, "I'd still prefer to see another down day or two - with a spike in volatility to set a bottom." We're getting exactly that action, so once this selling is done, we should be at a tradeable bottom.

My Additional timing work is based on numerous cycles and has resulted in the above potential reversal dates. These are not to be confused with the barometer signals or cycle times. However, due to their past accuracy I post the dates here.

2010 Potential Reversal Dates: 1/19, 1/28, 3/2, 3/23, 4/7, 5/30, 6/10, 6/28, 7/10, 8/13, 9/7, 10/2, 10/27, 11/21, 12/19. We publish dates up to 2 months in advance. 2009 Published Reversal Dates: 1/20, 2/11, 3/7, 3/15, 4/8, 4/16, 4/27, 5/7, 6/8, 7/2, 7/17, 9/14, 10/10, 10/24, 11/12, 11/30, 12/9, 12/21, 12/29. 2008 Potential Reversal Dates: 12/31, 1/11, 2/1, 2/13, 3/6, 4/5, 4/22, 5/23, 6/6, 6/27, 7/13, 9/2, 10/3, 10/22, 11/10, 12/11. 2007 Potential Reversal Dates: 1/10, 1/14, 1/27, 1/31, 2/3, 2/17, 3/10, 3/24, 4/21, 5/6, 6/15, 8/29, 10/19, 11/29, 12/13, 12/23, 12/31, 1/11/08. 2006 potential reversal dates: 1/16, 1/30, 2/25, 3/19, 4/8, 5/8, 5/19, 6/6(20), 7/24, 8/20, 8/29, 9/15, 10/11, 11/28. 2005 Potential reversal dates: 12/27, 1/25, 2/16, 3/4, 3/14, 3/29, 4/5, 4/19, 5/2, 6/3, 6/10, 7/13, 7/28, 8/12, 8/30-31, 9/22, 10/4, 11/15, 11/20, 12/16.


Timing Indicators

Use the following Timing/momentum indicators to assist in your trading of the QQQQ, GLD, USD, USO and TLT. They are tuned to deliver signals in line with the Stock Barometer and we use them only in determining our overall outlook for the market and for pinpointing market reversals. The level, direction, and position to the zero line are keys in these indicators. For example, direction determines mode and a buy signal 'above zero' is more bullish than a buy signal 'below zero'.

QQQQ Timing Indicator (NASDAQ:QQQQ)

QQQQ Timing Indicator

The QQQQ Spread Indicator will yield its own buy and sell signals that may be different from the Stock Barometer. It's meant to give us an idea of the next turn in the market.

Gold Timing Indicator (AMEX:GLD)

Gold Timing Indicator

Want to trade Gold? Use our signals with the Gold ETF AMEX:GLD. Gold gives us a general gage to the overall health of the US Economy and the markets.

US Dollar Index Timing Indicator (INDEX:DXY)

US Dollar Timing Indicator

Want to trade the US Dollar? Use our signals with the Power Shares AMEX:UUP: US Dollar Index Bullish Fund and AMEX:UDN: US Dollar Index Bearish Fund.

Bonds Timing Indicator (AMEX:TLT)

Bond Timing Indicator

Want to trade Bonds? Use our signals with Lehman?s 20 year ETF AMEX:TLT. The direction of bonds has an impact on the stock market. Normally, as bonds go down, stocks will go up and as bonds go up, stocks will go down.

OIL Timing Indicator (AMEX:USO)

Oil Timing Indicator

Want to trade OIL? Use our signals with AMEX:USO, the OIL ETF. We look at the price of oil as its level and direction has an impact on the stock market.


Secondary Stock Market Timing Indicator

Equity Put/Call Ratio

We daily monitor hundreds of popular and proprietary technical indicators that break down market internals, sentiment and money flow to give us unique insight into the market. We feature at least one here each day in support of our current outlook. As an annual subscriber to any of our services, you will get access to all our charts and research.


Daily Stock Market Outlook

We remain in Sell Mode, very close to a bottom and getting the spike lower action to set the bottom I was looking for last week.

Not much more to say than that. I know you're probably used to other market writers talking about how the news is driving things, but here's an observation for you. With over 60% of trading done by computers, the market is run mostly by machines, and not people. Do you think these computers take 'news' into account? No. They're complex algorythms (like the barometer, but working in the very short term) and they do not follow economic reports. They follow market internals and price action. And so should you. Forget about what they tell you on TV. They're just trying to fill time with interesting content so they can get viewers and pay for advertising. Don't get me wrong, I love CNBC and plan on being on it some day. But don't rely on it for your view on the markets.

If you're looking for more information, please visit our blog - I'll have updates and publish other articles there. http://investmentresearchgroup.com/Blog/

Regards,

 

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