Wednesday, April 23 2014
Are we in an up market now? It may look like one or feel like one, but that does not make it one. Besides, to answer that, we need a time frame. Over the last 5 years, we have definitely been in a strong up-market.
OK then, what about now? Well, the SPY has basically been relatively flat for most of 2014. Since the beginning of the year, the SPY is up about 4%, but almost all of that has happened in the last 6 days !!! See the graph below.
Short-term, we can see that the SPY has been in a "trading range" of 183.8-188.0 since the beginning of March 2014. We had a big drop near the beginning of April, when the SPY dropped from an intraday high of 189.6 to a low of 181.2 (-4.4%). That drop ended in a "bear-trap", when the SPY reversed itself the very next day and climbed all the way back to an intraday high of 188.4 today (and a close at 187.9). That's a gain of almost 4% in six days (impressive, but on low volume).
The worry comes from the fact that the SPY is very close to going back into "no-man's-land" (the "strip" between 188-189 on the SPY) for the 4th time in the last seven weeks !!! What happens next is anybody's guess. I will not feel comfortable on the upside unless the SPY breaks and holds above 189 for a few days/weeks (remember, where there are Bear Traps, there can also be Bull Traps).
By definition, what we can see is "on the surface". Even though our Market Strength Indicator sees a little deeper, it is not nearly as comprehensive as the MIPS models themselves ( http://www.mipstiming.com/msi___mips_members ). That is, the market could look weak on the outside (like in the most recent Bear Trap in the graph below), but the MIPS models were not "fooled" by what was happening only on the surface. While the surface looked weak, the guts were indeed stronger.
Sleep well, we have MIPS doing all of the heavy lifting
Monday, April 14 2014
We received a of lot questions in the last few days from MIPS members wanting to know what was MIPS assessment of the market (SP500 or SPY). Unless we would do an extensive, several day analysis of the internals of the MIPS models, we really can't honestly answer that question.
But, we have developed a "tool" that does just that, and it is available to MIPS members only. We call it the MIPS Market Strength Indicator (MSI) and it has been on our website for over one year. Recently, we improved the MSI, took it off of the front page, and made it available to MIPS members only. A "sample" MSI is still on our homepage for illustrative purposes, but it is delayed by 30 days or more.
You can access the up-to-date MSI by clicking on the link => http://www.mipstiming.com/msi___mips_members
- at the bottom of this email, we show you where to find this link on our homepage.
The MSI consists of several of our most accurate indicators. Hence, the MSI shows things like the relative strength of the market on a scale of -100 to +100. It aslo shows if the market is getting stronger (up-slope) or weaker (down-slope), etc. But it is NOT accurate enough to trade with.
The MSI can be compared to the "Vital Signs" charts that are available to physicians who "make the rounds" of their patients in a hospital. This Vital Signs Chart shows "indicators" of each patient's medical status, like their temperature, blood pressure, heart rate, etc. If any of these look bad, their physician will most likely dig deeper (like put them on medical alert, order more tests, etc.).
Today's up-to-date MSI looks like that immediately below. This chart tells me that the MSI sees the market as being very weak and one that could go anywhere from here.
BEAR MARKET (from Sept'08 - Apr'09)
Does the little "dip" recently (in the graph above) constitute the beginning of a bear market ???
If you are surprised at the answer below, you most likely have never seen a bear market from the eyes of technical indicators. To help with that, we went back to 2008-09 and recreated the MSI. Surprised at the outcome ???
When you see this again (most likely sometime this year) MIPS should be short and we should be making money hand-over-fist.
Another little secret. When the bear comes, he comes fast, wreaks havoc, and NEVER lets up. Therefore, MIPS is almost never tempted to join a "fake" up-trend in a market crash, because there are NOT many to be found.
HOW TO ACCESS THE UP-TO-DATE MSI
MIPS Members can gain access to the current MSI graph by clicking on the "Up-To-Date" link in the MSI window on our homepage (see immediately below).
------> http://www.mipstiming.com/msi___mips_members
Sunday, April 06 2014
The stock market took a dive on Friday, but how bad was it? Actually, not so bad. On 4/03/2014, we sent out a blog with the title :"Hold Your Breath, We're In No-Man's Land". In this, we pointed out that the SPY had traded the range of $184-189 for the last 30+ days and had hit $189 three times, but had failed to break above that "all-time high" resistance level. You can see that in the graph immediately below. Well, it tried to do so again in the last two days, only to be "slapped" all the way back to $186.4 on the second try !!! That was about 1.7% from its high that day.
How bad was that? Well, we had comparable days like last Friday on Mar 26th, Mar 13th, and Feb 3rd, only to see the SPY come roaring back each time. So, how bad will last Friday really prove to be? And, how would you like it if this turns into a big "market crash"?
What "bad" should mean to you (or not mean to you) and what you should be (and should not be) worried about is discussed below. So, read on !!!
Another way to look at "How bad a day was last Friday" is to step back and look at Friday from a longer-term perspective. The graph below is the last two decades using monthly bars. From this we can see two things:
1) Looking at the last few bars (months), you can see that the market has been virtually unchanged.
2) In 2000 and 2007, it took the SPY 9-10 months each time to change direction from bull to bear markets.
Again, all of that watching and worrying for nothing !!!
PS - One of our most devoted MIPS members called Friday a collapse until she saw the graph below.
NOW FOR THE REAL POINT OF THIS BLOG.
MIPS members should NOT be worried about a market crash, they should be excited about one.
- The real reason that I am (and lots of our long-term MIPS members are) so relaxed is because of
the way that our MIPS3/MF model performed in 2008 (verified by TimerTrac.com)
1.) MIPS Signals
Green = Long Red = Short Yellow = Cash
2.) MIPS3 Performance in 2008 (4Q'07 - 2Q'09)
FEEL BETTER NOW ???
Thursday, April 03 2014
In our previous blog (immediately below), we showed that the SPY was having trouble breaking above its all-time high of $189/share.
Many times the stock market seems to follow the simple rule that after it tries something 3 times, it's time to move on and try something different (triple bottoms, head and shoulders tops, etc.). It seems like we are there again.
Better hold your breath as we seem to be in another "no-man's land". For the last 30+ days the highs/lows for the SPY were between about $184-189/share (plus/minus 1.3%). Looking closely at the graph immediately below, you can see that most of that time the SPY was actually between $184-188/share, breaking above $188 only three times. The first two times this happened, the SPY rose only to $189/share and was "slapped" all the way back to $184/share(actually to $183.8).
In the last couple of days, we see a "here we go again" movement. The SPY is back to $189/share again, and it did stick its nose slightly above that level for a short period of time today. If it gets slapped back again at this level, then $183.8 becomes the next support level (and then, it ain't pretty after that). On the other side, we are at the verge of the SPY breaking above its all-time high. Knowing that the S&P 500 closed above its all-time high today is very comforting.
But, when we remember that MIPS makes money in up and down markets, we really should not care which way the market moves from here. We have MIPS to tell us what to do, and when!!!
<<< Previous Blog >>>
MIPS Members:
The SPY proved today that the market's "Stone Wall" that has prevented it from surpassing its all-time high is still there.
To see this plainly, please look at Graph #1 below:
1) The SPY hit its all-time high at $189 on 3/07/2014.
2) Then it trickled down for a few days followed by a big drop on 3/13/2014.
3) The SPY bounced back on the intersection of its trendline and support level at $185.
4) This uptick met an abrupt halt at $188, exactly where the big drop started several days before.
5) Since then, the SPY has tried and failed 3 more times to break above this "Stone Wall" at $188.
6) In fact, early today the SPY did pierce this level and climbed all the way to the all-time high level at $189,
only to be slapped all the way back down to the low of the day at $186.2 (see the 2nd Graph below).
7) The volume on down days was higher than on up days (bearish, but certainly not conclusive).
These movements in the SPY are more pronounced in Graph #2 below
Graph #1
In Graph #2 below, the SPY now appears to be in an "Reverse Pennant" or "Widening Wedge" pattern, either or both of which could prove to be bearish. As we all know by now, there are plenty of reasons why this market should have had a correction by now and really only one big reason why it should continue to climb higher. However, the one big reason (the Fed) is starting to lose traction.
It's anybody's guess where the market will move from here. But MIPS does not guess, it calculates all the likely options and chooses the one with the highest probably. And, it almost always beats my guesses.
Graph #2
Friday, March 21 2014
The SPY proved today (March 21) that the market's "Stone Wall" that has prevented it from surpassing its all-time high is still there.
To see this plainly, please look at Graph #1 below:
1) The SPY hit its all-time high at $189 on 3/07/2014.
2) Then it trickled down for a few days followed by a big drop on 3/13/2014.
3) The SPY bounced back on the intersection of its trendline and support level at $185.
4) This uptick met an abrupt halt at $188, exactly where the big drop started several days before.
5) Since then, the SPY has tried and failed 3 more times to break above this "Stone Wall" at $188.
6) In fact, early today the SPY did pierce this level and climbed all the way to the all-time high level at $189,
only to be slapped all the way back down to the low of the day at $186.2 (see the 2nd Graph below).
7) The volume on down days was higher than on up days (bearish, but certainly not conclusive).
These movements in the SPY are more pronounced in Graph #2 below
Graph #1
In Graph #2 below, the SPY now appears to be in an "Reverse Pennant" or "Widening Wedge" pattern, either or both of which could prove to be bearish. As we all know by now, there are plenty of reasons why this market should have had a correction by now and really only one big reason why it should continue to climb higher. However, the one big reason (the Fed) is starting to lose traction.
It's anybody's guess where the market will move from here. But MIPS does not guess, it calculates all the likely options and chooses the one with the highest probably. And, it almost always beats my guesses.
Graph #2
Tuesday, March 18 2014
In our blog from March 4, 2014 below, we stated that we believed that the market (the SPY) had confirmed its breakout above its previous all-time high (and strong resistance level) of $185 per share on 2/27/2014. Of course, on that day its upside "resistance" at $185 immediately became its downside "support" level.
In that blog, we also went on to say that: "Most likely, the SPY will come back down to test this new $185 support level and the SPY must 'hold the line' there for this 'breakout' to be real and lasting."
And, that is exactly what the SPY did last week. As can be seen in the graph immediately below, after the SPY reached new highs, it dropped back down over 6 days and actually closed a little below its strong support at $185 (which now looks like a typical "bear trap"). Today the SPY rallied and closed at $186.33/share, thus technically again confirming the previous breakout. Now, the new upside resistance for the SPY is at about $188/share and the new downside support is at about $184.5/share. The next support level is the 50-day EMA, which is now at $183.4/share. It is important to notice that:
1) the two "pullbacks" in the last few weeks did not break the SPY's long-term trendline,
2) since MIPS does not follow "wiggles", the MIPS models did not get sucked into costly short calls, and
3) the volume on today's uptick was on healthy, but not high, volume.
All things considered, and from a purely technical standpoint, the market appears to be poised for more upside. But, there are many reasons why the market could pull back sharply (like the situation in the Ukraine, amongst may others). So, instead of trying to "guess" with our hard earned money which way the market will go from here, let's let MIPS do the heavy lifting and tell us what to do.
Paul Distefano, PhD
CEO/Founder
MIPS Timing Systems, LLC
Houston, TX
281-251-MIPS(6477)
<<< Previous Blog >>>
3/04/2014
MIPS Members:
In our previous Blog below, we showed a breakout of the SPY above its all-time high level of $185 on 2/27/2014 (Thursday) and a confirmation of this breakout on Friday. After a single day of dealing with Putin's ego on Monday (SPY back down to close a fraction below $185), the SPY bounced back up today to $187.85 (new high). And, it was very comforting to see higher volume on the up days (see graph immediately below).
All of this is good news for the bulls. The market should push even higher in the short-term (weeks/months). For this to actually happen, however, we need to see continuing higher levels for the SPY from here or at least several solid days above $185. Most likely, the SPY will come back down to test this new $185 support level and the SPY must "hold the line" there for this "breakout" to be real and lasting.
Still, its anybody's guess. To our benefit, we have MIPS to tell us what to do (all MIPS models are still long).
Tuesday, March 04 2014
In our previous Blog below, we showed a breakout of the SPY above its all-time high level of $185 on 2/27/2013 (Thursday) and a confirmation of this breakout on Friday. After a single day of dealing with Putin's ego on Monday (SPY back down to close a fraction below $185), the SPY bounced back up today to $187.85 (new high). And, it was very comforting to see higher volume on the up days (see graph immediately below).
All of this is good news for the bulls. The market should push even higher in the short-term (weeks/months). For this to actually happen, however, we need to see continuing higher levels for the SPY from here or at least several solid days above $185. Most likely, the SPY will come back down to test this new $185 support level and the SPY must "hold the line" there for this "breakout" to be real and lasting.
Still, its anybody's guess. To our benefit, we have MIPS to tell us what to do (all MIPS models are still long).
<<< Previous Blog >>>
MIPS Members:
After the SPY hit or broke its all-time high resistance level at $185 for the last 5 of 6 days and got slapped back each time, it finally broke out above that level on 2/27/2013 (see graph immediately below). Although the breakout was not dramatic (no gaps, no extremely high volume, etc), it was a classic breakout. The SPY opened lower than the previous day's close, and steadily climbed all the way to $185.82 on the close on Thursday.
From this, one would expect the market to climb from here. So far on Friday (10:15 am CST), all of the major indices are up (with the SPY up +0.5%). For how long and how high this continues, we will have to wait and see. All of the MIPS models are still long at this time.
<<< Previous Blog >>>
MIPS Members:
In our previous blog below, we pointed out how the SPY had made a dramatic change in direction in the first week of Feb'14, and turned up in what seemed to be a powerful uptrend. But, the uptrend lacked strong momentum due to the low volume in this uptrend. In other words, the uptrend was the result of buying by the little guys and was NOT joined by the fat kats.
So, what has happened since then? The SPY uptrend hit what I call a chartist's "stone wall" at its previous all-time high of 185.0 (see chart immediately below). And, by the way, the SPY tried to break through 185.0 in 3 of the last 4 trading days, only to be slapped back at exactly 185 all 3 times. The little guys could not push the SPY through the 185.0 resistance level all by themselves. And, they will not try this alone much longer. My opinion is that, if this market gets some support from the fat kats, the SPY will continue up to new highs. But with the little guys alone, it cannot. The SPY volume levels will be high on my radar screen next week.
And, of course, if the little guys give up or the fat kats go against them, the SPY will most likely fall back to its support level at 174, or below.
It's so good to put the decision of what to do on the shoulders of the MIPS models so we can sleep at night. Let's wait for MIPS to tell us what to do, and when.
Friday, February 28 2014
MIPS Members:
After the SPY hit or broke its all-time high resistance level at $185 for the last 5 of 6 days and got slapped back each time, it finally broke out above that level on 2/27/2013 (see graph immediately below). Although the breakout was not dramatic (no gaps, no extremely high volume, etc), it was a classic breakout. The SPY opened lower than the previous day's close, and steadily climbed all the way to $185.82 on the close on Thursday.
From this, one would expect the market to climb from here. So far on Friday (10:15 am CST), all of the major indices are up (with the SPY up +0.5%). For how long and how high this continues, we will have to wait and see. All of the MIPS models are still long at this time.
<<< Previous Blog >>>
MIPS Members:
In our previous blog below, we pointed out how the SPY had made a dramatic change in direction in the first week of Feb'14, and turned up in what seemed to be a powerful uptrend. But, the uptrend lacked strong momentum due to the low volume in this uptrend. In other words, the uptrend was the result of buying by the little guys and was NOT joined by the fat kats.
So, what has happened since then? The SPY uptrend hit what I call a chartist's "stone wall" at its previous all-time high of 185.0 (see chart immediately below). And, by the way, the SPY tried to break through 185.0 in 3 of the last 4 trading days, only to be slapped back at exactly 185 all 3 times. The little guys could not push the SPY through the 185.0 resistance level all by themselves. And, they will not try this alone much longer. My opinion is that, if this market gets some support from the fat kats, the SPY will continue up to new highs. But with the little guys alone, it cannot. The SPY volume levels will be high on my radar screen next week.
And, of course, if the little guys give up or the fat kats go against them, the SPY will most likely fall back to its support level at 174, or below.
It's so good to put the decision of what to do on the shoulders of the MIPS models so we can sleep at night. Let's wait for MIPS to tell us what to do, and when.
<<< Previous blog >>>
MIPS Members:
The market has undergone a remarkable rebound so far in Feb'14 (see graph below). In the last 10 days, the SPY regained almost all of the ground that it lost in the 10 days before that. Problem is, however, that the rebound thus far has been on ever decreasing volume, so it was not caused by the big guys.
So, where does the SPY go from here. From global economic conditions, the actions of the Fed, and the market's technical indicators, one could make a good case for the SPY to go up (to over 200) or down (to below 160) from here. And, we at MIPS sure don't have a prediction either way at this time (but MIPS will in ample time).
If outside conditions don't greatly surprise us, we believe that the SPY will go up and try (at least several times) to break through its previous high of $185 to the upside. If it does, there is not a consensus top where it may play out. On the other hand, if the SPY fails to break its previous high (again, after several tries), it will most likely drop all the way back to $174. And, if it breaches its support at that level, then look for it to fall to 160 or lower. The worst case is that the SPY goes into a sideways trading pattern between 174-185, thus developing into a pattern that is ripe for whipsawing.
We will wait for the big guys to make up their minds and start their move, and then let MIPS tell us what to do, and when.
Sunday, February 23 2014
MIPS Members:
In our previous blog below, we pointed out how the SPY had made a dramatic change in direction in the first week of Feb'14, and turned up in what seemed to be a powerful uptrend. But, the uptrend lacked strong momentum due to the low volume in this uptrend. In other words, the uptrend was the result of buying by the little guys and was NOT joined by the fat kats.
So, what has happened since then? The SPY uptrend hit what I call a chartist's "stone wall" at its previous all-time high of 185.0 (see chart immediately below). And, by the way, the SPY tried to break through 185.0 in 3 of the last 4 trading days, only to be slapped back at exactly 185 all 3 times. The little guys could not push the SPY through the 185.0 resistance level all by themselves. And, they will not try this alone much longer. My opinion is that, if this market gets some support from the fat kats, the SPY will continue up to new highs. But with the little guys alone, it cannot. The SPY volume levels will be high on my radar screen next week.
And, of course, if the little guys give up or the fat kats go against them, the SPY will most likely fall back to its support level at 174, or below.
It's so good to put the decision of what to do on the shoulders of the MIPS models so we can sleep at night. Let's wait for MIPS to tell us what to do, and when.
<<< Previous blog >>>
MIPS Members:
The market has undergone a remarkable rebound so far in Feb'14 (see graph below). In the last 10 days, the SPY regained almost all of the ground that it lost in the 10 days before that. Problem is, however, that the rebound thus far has been on ever decreasing volume, so it was not caused by the big guys.
So, where does the SPY go from here. From global economic conditions, the actions of the Fed, and the market's technical indicators, one could make a good case for the SPY to go up (to over 200) or down (to below 160) from here. And, we at MIPS sure don't have a prediction either way at this time (but MIPS will in ample time).
If outside conditions don't greatly surprise us, we believe that the SPY will go up and try (at least several times) to break through its previous high of $185 to the upside. If it does, there is not a consensus top where it may play out. On the other hand, if the SPY fails to break its previous high (again, after several tries), it will most likely drop all the way back to $174. And, if it breaches its support at that level, then look for it to fall to 160 or lower. The worst case is that the SPY goes into a sideways trading pattern between 174-185, thus developing into a pattern that is ripe for whipsawing.
We will wait for the big guys to make up their minds and start their move, and then let MIPS tell us what to do, and when.
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