Stock Market Prediction

[lamboguy]

Originally Posted by highnote

Nope. I meant what I wrote. I am on the sidelines with 50% cash in most of my accounts. If SP gets to 2852 it will still be well below its recent high.

To be honest, I use the Value Line Arithmatic Index because it is a little more sensitive than the SP, but SP is correlated with VL and SP is more well-known. So for paceadvantage purposes it is simpler to talk about the SP and its more easily understood.

Additionally, I use other indicators, but the SP and VL give off buy and sell signals most frequently.

Based on the major momentum buy signal I got in December I am still bullish. This trump noise with the tariffs will blow over eventually and the market should resume its upward trajectory, in my opinion.

I captured a lot of value from December until May and hope to do so when the trend reverses. In the meantime, no point in pissing into the wind.

great call, keep up the good work

[highnote]

Originally Posted by Ocala Mike

The sell signal was the onset of Trump's full-blown trade war. Remember, though, we're always only one tweet away from a big rally (or another 10% correction).

Agreed. I wish I could predict what the next tweet will bring. I can't. So I don't. The best I can do is look at my indicators and act accordingly. Sometimes I get whipsawed. If the tariffs disappear the market will likely go higher and a buy signal will appear. I could jump back in and another tweet could send the market lower triggering a sell signal.

There were 6 good months from December to May without a sell signal. Then the indicators flashed sell in May.

In general, my indicators are pretty bearish, but employment seems to be good and interest rates are low. The yield curve is of concern, though.

Overall, I'm just not seeing anything that makes me think the market is going higher in the short term. I don't know if it will go much lower because employment is good and interest rates are low.

My bet is that SP will go lower or remain near where it is before it will go up 4% from its recent low and trigger a buy signal.

[highnote]

Originally Posted by lamboguy

great call, keep up the good work

As Ocala Mike said, we're only 1 tweet away from an upward trend or a continuation of the downward trend.

[AltonKelsey]

Yeah, probably better to let the market go up 4-5% before putting that cash to work.



No need to rush things.



Todays massive 55 SPX point rally probably be reversed tomorrow on the next tweet .


good work!

[PaceAdvantage]

Originally Posted by AltonKelsey

wow.



thats what, 100 s&p points away.

Not any more

[highnote]

Originally Posted by AltonKelsey

Yeah, probably better to let the market go up 4-5% before putting that cash to work.



No need to rush things.



Todays massive 55 SPX point rally probably be reversed tomorrow on the next tweet .


good work!

Plus the fed could say next week they want to raise rates a quarter point. Down goes the market. Then trump says he is relaxing the tariffs. Up goes the market. Meanwhile, nothing has changed -- just the noise.

That's why Buffett is successful. His favorite length of time to hold a stock is forever. In the long run, nothing trump or the fed says today matters.

[highnote]

Originally Posted by PaceAdvantage

Not any more

If SP hits 2852 I will probably jump back in, but also cautious. One negative tweet send the market down 50.

If I buy at 2852 the market would have to fall to 2738 before I sold again.

Getting whipsawed is possible, but usually the trend holds.

[PaceAdvantage]

Originally Posted by highnote

One negative tweet send the market down 50.

And this is somehow different or new, compared to the last couple of years?

[highnote]

Originally Posted by PaceAdvantage

And this is somehow different or new, compared to the last couple of years?

It might not be that much different.

[PaceAdvantage]

Just saying, he's been president and tweeter in chief for over two years now...

[highnote]

Originally Posted by PaceAdvantage

Just saying, he's been president and tweeter in chief for over two years now...

Yes.

[AltonKelsey]

No question about it, waiting for a 100 point SPX rally was the right thing to do. Circumspect in the extremus



Now, is the checkbook handy, all the folks that bought the bottom are expecting prompt payment

[highnote]

SP gave a buy signal based on momentum when it passed 2854. If it closes above 2854 then it's probably OK to buy.

I prefer to use the Value Line Arithmetic Index. The buy signal would be triggered when it reaches 6041 -- 4% above its recent low point. It is currently almost to 6028 -- 13 points from a buy signal.

Since I use the 4% model for my retirement accounts I am in no hurry to buy. I take a longer term view and happy to sit in cash. I try not to lose money in this account.

Some people might want to use a 3% upward move from a recent low to start trading. There are more whipsaws, but you catch moves earlier.

[Saratoga_Mike]

HN - do you use any volume requirements for your buy/sell signals?

[highnote]

Yes. The model based on SP and Value Line is a momentum model, but in addition, I look two more momentum factors -- 1.) the daily ratio of Advancing Stocks to Declining Stocks and 2.) the daily ratio of Advancing Volume Stocks to Declining Volume Stocks.

If the 10 day average of (1.) is 2 to 1 or greater that is a huge buy signal. That happened last January and the market increased 20% by April 8. It leveled off for a month before falling in May. This is a rare signal, but it is important.

If (2.) is 9 to 1 or better that is a big buy signal. If the reverse of (2.) is 9 to 1 that is a sell signal. The advancing volume stocks to declining volume stocks had a ratio of 24-1 on December 26, 2018. That was a big buy signal. It followed up with the 2-1 ratio on January 8. The Value Line was 4% above its recent low on January 2. Everything was pointing to a higher market.

I use these 3 momentum factors along with some interest rate and other factors to determine when to get in and out of the market. When I do what the model says to do it usually works. When I think I am right and the model is wrong I am usually wrong.

Don't fight the Fed. Don't fight the tape. Sell in May and go away. There is a lot of wisdom in those old Wall Street sayings.

The only reason the market fell recently was because of tariffs. Get rid of the tariffs and the market would be booming. Maybe it was booming too much? Or maybe Trump makes some tweets to cause the market to fall and insiders buy on the dip? There are probably many other reasons. I don't waste time trying to figure out what it all means because the price and volume gives plenty of clues about where the market is going.