April 2nd, 2008

Market Timing Indicator Improves Modestly

It happened today. Today’s 3.6% jump in the S&P 500 Index caused the MTI to morph after 15 days from 21605, the most bearish, into 17284 by the index crossing back up over the lowest 60-day moving average and begin to attack the next level, the 90-day moving average, or where the MA alignment continues to be 4321 but the index crosses back up over the 300-day (3×4321=17284). There have been 60 occurrences of 17284 of which 38 resulted in gains (averaging 1.7%) and 22 further declines (averaging -1.31%).

And after 17284? In 25 cases, the MTI reverted back again to 21605 and 33 time into a 12963. If you look on the recap, a 12963 is still called an “all cash” position so we’re a long way from being out of the woods. But more on all this in the blog as things unfold.

I want to explain all this more fully but I happen to be traveling and won’t be able to comment until Thursday. My read of the situation is that we’ve been there several times before in March. There was the 4.1% day on March 18 and the bounce related to Fed’s first interest rate action on March 12. So today, we again hear the chatter about “hitting bottom” or “the best first day of a Second Quarter since 1938”.

My apologies to all of you for not being to write more completely. All I’d like to say that the market still needs a lot of mending before a full bull market takes off. And when that happens, there will be lot’s of profits to harvest. So stay tuned. I’ll be back shortly.

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