By Jeff Pierce

2 Out of 3 of the markets I cover are now bearish for my market timing signal. The Dow flipped on Jan 24th and the Nasdaq on Jan 27th, wihile the TSX remains bullish. Caution is advised against opening new positions, especially if you trade momentum stocks as they can get hit the hardest. The last 4 times my timing signal turned bearish it was a strong buying opportunity. It’s never easy to buy into selling but if you use discipline and target stocks that are being taken down with the overall markets and remain in bullish uptrends you could be rewarded.

All is not lost if you are a bull as even with the recent selling ¬†we’re not that far off the highs and we really needed some sort of pullback as the markets were getting frothy. My twitter stream has few bulls left and the headlines on my news sites are starting to become downright ominous. It’s not cause to hit the panic button yet, but it definitely is time to be sure your exit strategies are in place, especially if we get a weak market bounce.

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3 Responses to “Market Timing Signal – Down”

  1. Danny Says:

    Hi Jeff,

    I think you are quite right to notice how quickly everyone has turned bearish already. And that’s a long term bullish sign. I would be more worried about the stock market if bullish sentiment remained very high after a 5% decline.
    One thing I noticed on social media last year. When I put out a message saying that gold was set to go down, no likes, no comments. Whenever I put out a message that gold was ready for a rally, plenty likes from people I have never heard about.
    And of course, gold has kept going down.
    With stock it is still the reverse. When I post something contending that stocks will go up for several more years, no likes and no comments. But when I post a message warning for a correction to start, plenty likes.
    And of course, stocks have continued to go up..
    I will start worrying about the stock market when I start getting likes for bullish posts.

    Danny

  2. jeff pierce Says:

    there are so many calling for a top. in fact, so many are quick to say that we’ll rally for a little bit more and then lights out. no top is ever that obvious. ever….

    I have my own reservations about how far the bounce can take us but I’m also heavily invested long. so basically what I think and what I’m doing are 2 different things. it’s ok to have a healthy about of skepticism, just don’t let it over-ride your trading strategy.

  3. JF Says:

    The perspective in short term look negative, but we have last year 3-4 pullback of 4% and then rally.

    This year the tape look different, the chance for a bigger pullback is there.

    At the end of the day, like last year : trade what you see..

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