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IMVHMO** – Market Timing for Friday, 10/18/2005
We again moved to 100% percent short position after covering the previous position for about half a day. Our stop loss levels were hit and we covered our positions according to our signals and timing models. We still foresee a market decline continuing for several more days.
We have levels of possible support for the S&P 500 (SPX) at 1170 (a minimum level for this decline). Subsequent lower support levels are: 1163, 1142 and 1090.
There is a much better potential for the decline to be arrested at those modest levels than before. As you may recall, the earlier potential for a 1987 style washout has been reduced by the orderly decline so far and the well structured rally that we had been expecting.
The rally did touch the 1191 level. If the SPX had stayed above that level, we would have considered that event as the signal that there was more of a rally ahead. It would have also signaled to us that our original projection of a significant low on October 21st or 24th was much less likely to occur.
Additionally, Tyco (TYC) has continued to break below support levels and looks well on its way to the $21 level. It closed today at $26.16, but touched $25.71, only 3 cents from its February 2004 low intraday low. So far, it has lost over 12% of its market value since our mid-September sell signal. Since January of this year, Tyco has lost over 27% of its market value, as it declined from a peak at $36.
The point is that individual stocks often foretell or front-run the market indexes and their trends. This is simply an overt fact that is often forgotten by investors and traders.
More tomorrow.
Always be a blessing.
W. B. Busin
** – IMVHMO, will always describe directly whatever I write here in this wonderful forum. It is a slightly altered but common Internet acronym or shortcut. Here it means In My Very Humble Market Opinion.
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Our stop loss levels were hit and we covered our positions according to our signals and timing models - it's very interesting...