*** PREDICTION for the Next Trading Day:
For Monday we say: "We remain 'slightly Bullish', although the 'slightly' is a bit slighter for Monday. Still, earnings season unofficially begins after the Close on Monday, and we won't have any serious economic reports until mid-week, so the market should hold up pretty well for the next few days. We think that the market will 'hold' on Monday, or even make modest advances. The Market Timing Indicator (MTI) remains at the 1.0 neutral value (mostly in response on our 'slightly Bullish' assessment), and the RED ("Danger") Market Color Code continues. However, given the fact that our long-term (mutual fund) signals remain in the BUY state, suggesting that the current market has a firm 'floor' under it, the RED Market Color Code is probably needlessly pessimistic".
*** Scoring of Previous PREDICTION:
For Friday we had said: "Our new BNB Market Status Indicator is 'slightly Bullish', but once again we have a Caution Flag signifying increased risk; there are key employment reports coming out in the morning, and the recent rally may be growing a bit tired. Nonetheless, the overall market situation looks fairly good (barring any more meltdowns in Europe). The Market Timing Indicator (MTI) is currently 'locked' at the 1.0 neutral value (because of the BNB Indicator), and the continuing RED (Danger) Market Color Code largely reflects the increased risk. The bulk of our signals are in the BUY state for Friday, and of course, our long-term (MFTI) signals have been in the BUY state for quite some time. We expect that the market will at least 'hold' near current valuations on Friday, but has a good chance of moving somewhat higher. We expect, however, that the Dow may have trouble rising much further, and that 'techs' should be relatively stronger".
How did we do? The Forecast for Friday was 'fair'; the Caution Flag was certainly justified, given the very weak opening resulting from the poor jobs report, and although equities didn't 'hold' near current valuations, it was clear that the market was still somewhat bullish as it ended with only modest losses.
*** Note 1: The MTI can range from about -2.5 to +2.5, with a 'neutral' value of 1.0. A value of 1.0 will generally be associated with a market that is either stable (holding its valuations) or rising slowly and erratically. Values greater than 1.0 signify a 'long' market, while values substantially below 1.0 (and especially zero or negative) signify shorting situations. Although the MTI is extremely useful (especially in the construction of equity-specific models), bear in mind that it has a reaction time of several days. It is thus not sufficient to use this indicator alone for trading specific equities on a day-by-day basis.
Schulenberg 2X-Hedged IWM (^IWM2)