*** PREDICTION for the Next Trading Day:
For Friday we say: "The market will most likely rise somewhat higher on Friday, but we are now on very thin ice and a sell-off of unknown magnitude is imminent -- unless oil prices decline, in which case the uptrend might find renewed strength. Our MTI (Market Timing Indicator) remains at the neutral value, but our neural networks remain pessimistic, and many of our other indicators offer little support. If the jobs report tomorrow disappoints, then sellers will certainly jump in. Still, we think the market will rise at least through tomorrow".
*** Market Timing Indicator:
The Market Timing Indicator (MTI)(see Note 1 below) is now at 1.0000 (equal to the neutral value of 1.0. The market is thus apt to 'hold', or rise slightly for the next day or two.
*** Scoring of Previous PREDICTION:
For Thursday we had said: "We expect a modest bounce on Thursday, although this is likely to be very short-lived ... perhaps ending abruptly when Friday's jobs report is released. The question is: is it worth the risk of going Long for just a day or two? Sure, we will go for it. We don't have a lot of BUY signals since most are in Cash, and a minority remain Short, but we think some profits can be made playing both the Longs and the Shorts. We expect that the market will close somewhat higher on Thursday, and the S&P and small-caps are likely to outperform. Still, we believe that a correction is in progress, and we can expect another downward leg in the very near future".
How did we do? The Forecast for Thursday was extremely good, although a sizeable number of our signals had remained in the Cash state and thus missed out on the gains; our SPY and IWM signals did extremely well, however. We still believe that a correction is in progress...
*** 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)