August 21st, 2009

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My buy/sell signal generator had another up tick today in its most sensitive component for both the Naz and SPX. Yesterdays up tick was mediocre, by comparison.

Also, on Naz, one of the other indicators also had an up tick and a third indicator stalled in its down trend. This is telling me that what you see is what you get and is most certainly real.

For the SPX, one of the other indicators has stopped its descent and moved up a little.

So while the Naz has 3 of 4 indicators showing strength, the SPX has only two. I fully expect to see improvements in both of these next week.

When these last turned up off the July low, all the indicators had been dropping from the May 8th high and the slope of their descent had slowed. As a result, when the market turned on July 13th, all the indicators confirmed the move by July 15th. Before yesterday, these indicators were all pointing straight down so it may take a couple extra days to confirm the buy signal. I am front running this expected confirmation, though cautiously and with small share sizes.

For those of you who went short today, it has been my experience that when the $CYC and the $TRAN/$DJT outrun the market as they did today, you can ‘generally’ expect a pull back of some sort during the following session, though not necessarily at the open.

The $TRIN hit .21 early in the session and closed at an amazing .29. The kind of buying such a low reading represents is not sustainable and so this too hints of some kind of pull back on Monday.

If my buy/sell signal generator is accurate, then any pull back should offer a buying op.

Edited on Sunday, August 23rd to add:

The P/C ratio closed at .59 indicating extreme exuberance. This too may play a factor in some sort of pull back on Monday, August 24th. However, Friday was an accumulation day and those that didn’t get in Friday may want to participate Monday and so will buy any intra-day dip.

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