*** PREDICTION for the Next Trading Day:
For Monday we say: "We expect that Monday's market will close flat or mixed, and should be able to fight off a tendency to move lower. Our long-term signals remain in the BUY state, giving us some sense of security, but Monday may be a rough day before all the dust settles. We have a RED (Danger) Market Color Code, and the Market Timing Indicator (MTI) is now quite a bit lower than the 1.0 neutral value; the MTI is currently at 0.4167. Still, the lower MTI is counterbalanced by some improved readings from our neural networks, and it looks like we will have a delicate balance. Most of our signals remain in Cash, and shorting does not appear to be profitable at the present time."
*** Scoring of Previous PREDICTION:
For Friday we had said: "Our best guess is that the market will again 'hover' near current valuations, although our ORANGE (our 'anything can happen') Market Color Code suggests that Friday will be a volatile, transitional day that could very well tip in either direction. Still, we will bet on another flat/mixed kind of projection, and in line with that most of our signals are staying in the Cash state. The Market Timing Indicator (MTI) remains below the 1.0 neutral value, but 0.9143 is still a rather neutral-ish kind of number".
Note that our timing algorithms do not really 'know' about the Friday jobs report, and thus the ORANGE Market Color Code for Friday is most likely just coincidental. Clearly the jobs report will be the market mover on Friday, and although a favorable jobs report will undoubtedly propel the market higher (at least for a while) we have very few BUY signals that would be suitable for trading on Friday. The best recourse then is to stay in Cash and refrain from putting money at risk by following a BUY (e.g., ADBE, ILMN, CHKP), although this is always 'permissible'.
How did we do? The Forecast for Friday was far too optimistic, but the fact that prices pretty much held throughout the day (Open to Close) continues to suggest that the market remains rather resilient.
*** 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)