Pre-Market Update, November 24th, 2009

9:15am

I didn’t update the SG’s yesterday but there is no change. They are both in a transitional phase. This is a pure judgment call on my part because yesterday all four indicators did tick up and the SG for the $SPX did move much closer to the zero line. The reason for this is that there is quite a loss of momentum evident in two indicators on the $SPX. Only a mega rally today would correct this. I am second guessing the SG and as I’m learning through following it, this is not a good idea. The SG began to lose downside momentum on 11/4 and then on 11/5 the momentum indicator reversed. If I had entered the market then, when the SPY closed at $106.85, I’d be sitting on about a $4 dollar profit right now. I’d still be in the SPY today and waiting for a real reversal signal from the SG. In other words, the SG is a better trader than I am. Because of this, on the next dip buying opportunity, I’m going to set up an ideal portfolio to track the SG.

But as I’ve been going on about for the last several days, the market is not exhibiting internal strength. I found this article last night about the Summation Index in which Tom McClellan says that if the bulls are in charge then the the Summation Index should be above 500. The Summation Index hasn’t been above 500 since 11/3 and it just can’t seem to make up its mind about whether it wants to go up or down. Maybe that will all change today.