Wednesday, March 14, 2012
The Bears Stayed Legit for Another Day
Despite AAPL's green-gap-and-run day, the market failed to follow through. However, the bulls didn't do badly either -- giving up only a fraction of a few points after yesterday's mammoth sized rally. The transports and the small caps showed a bit more weakness, however. And VXX made some respectable attempts to make a bottom, although the rally faltered into the close. But my main concern for the day's action was still on the $BPCOMPQ bullish percent index, which was hanging on a thread yesterday. After the hours I was relieved to learn that the sell signal survived another day. Teetering, but the sell signal remains.
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Is this a sell signal to get out of the S&P or bearish bet like SPXU?
ReplyDeleteAlex, having witnessed my track record, I hope you take everything I say with more than a few grains of salt. If I were long, of course, I'd have the luxury to take profit now and stay in cash as the overall trend is still up. If I were aggressive and a glutton for punishment, I'd be happy to start shorting now. Unfortunately, I am in neither of the above situations. I'm trapped in bear funds and am trying to gauge where I should perhaps cut the pain. Everyone has his reasons and everyone has to pull his own trigger. Good luck!
DeleteYou seem to be rather familiar with using technical indicators and how to use them to "guess" trends. These are things that I am not familiar with. For example, I have never heard of $BPCOMPQ. So, when you say that "the sell signal survived another day. Teetering, but the sell signal remains", I wonder if that means it's good news for the bears?
ReplyDeleteAny pointers on how to use the $BPCOMPQ would be greatly appreciated too :)
I don't want to ruin the career of a newbie, so make sure you seek out other gurus to protect yourself. If you don't get cute like I do, one simple system is to be long when BPCOMPQ is above the 10 day MA, and short (or cash) when it is below. You'll be guaranteed to be with the trend, but you'll also lose a big chunk of profit when trend reverses. The only time you lose money is during sideways market, where the signals go up and down and you lose each time as you get whipsawed. Sell signal is good for bears.
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