Saturday, November 7, 2015

Posted November 3, 2015

My sentiment model gave a sell signal yesterday at the close with the the composite 10 dy ema reaching the -1 stddev at -.66 (actual -.70). 

Previously, I posted that I was expecting a short but sharp decline similar to Dec 2014, but the overall sentiment pattern now more closely resembles that of the Sept 2014 top which would mean a more serious decline of 10% or more. Note that the longer term sentiment 20 dy ema is now lower that it was in Sept 2014. The sell signal may be 1 to 2 weeks early as in 2014, however.

So I hesitate to issue an official sell at this moment, particularly since one of my favorite short-term indicators – the daily VXX volume indicator, has not shown sell levels. This acts similar to the H.O indicator and occurs in clusters, not always important, but sometimes …
Last occurrence 08/18 with 4 occurrences between 08/10 and 08/18 with result –10% decline in 2 wks, previous multi-signals and result, 2015/04 with –2% decline over 2 mns, 2014/08  with –10% decline in 6 wks.

My current outlook is a continued upward chop for one-two weeks with possible new highs in the SPX 2150-70 range aka Oct 2007 top, then a sharp selloff aka Dec 2007-Jan 2008.

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