The underlying trend of the VectorVest UK composite turned to down after trading closed on Thursday 11th December. On the same day, as the market had closed below the close of the last 10 sessions, a Confirmed Down signal was recorded on the chart. This is a signal that needs to be taken seriously.
Prior to the C/Down signal, the shorter term signals from the Color Guard were flashing red for most of the week.
Remember the signal is NOT any form of prediction of the future. The signal down is a function of price direction, momentum and the breadth of the market as measured by the Buy/Sell ratio.
The Composite is shown to the right with the Confirmed calls in place as marked by the red and green triangles. As you can see, the last red triangle preceded a very nasty drop in the market over the last weeks of September and the first two weeks of October.
There are a few things to think about at this time.
- It’s not a time to be a buyer of shares. I am an optimistic soul in my old age but the market is falling, and only an idiot would try to predict how far it can go. Catching a falling knife can be painful.
- I have personally made the decision to raise cash, as I don’t want to stress in positions over the holidays. In the October fall, my conservative high VST shares held their own exceptionally well, although I had a few worrying thoughts at around the 15th of October.
- If you are sitting in shares, then watch stops closely and don’t hesitate in their execution.
- In down markets, humming a little Bob Marley seems to help. Don’t worry about a thing. Every little thing’s going to be alright.
The sell-off in the UK is much stronger than in the US, but that market has also given a Confirmed Down signal. As I write, the FT100 has broken through the 62% retracement of the move up since the 15th of October while the Dow 30 is sitting at the September 19th high, which is less than a 38% retrace. Clearly the effects of the resource-heavy stocks that comprise the FT100.
The good news is that we are going to do it all over again. The market will turn and it will turn and give the 5 signals that I have been talking about over and over in the Blog.
At present, the UK market is in a Down/Down trend, with the short term trend down confirmed by the RT Kicker timing system. For those brave folk who have the courage to sell something you don’t own, that’s a great signal to be short of stocks. On the strategy section on the front page of VectorVest, the experts have suggested a search within Unisearch to find shares for this purpose.
I can only communicate what I will be doing myself, and that’s quite simple. Let the market play itself out on the downside and watch for the following:
- The Primary wave turns up
- A green light in the price column of the Color Guard
- A green light in the price column of the Color Guard that’s confirmed by the RT kicker timing system
- The underlying trend turns up
- The underlying trend is confirmed by price action.
I shall be getting my feet wet and sticking my toes into the market at the green light buy and adding when the green light is confirmed by the RT kicker. I would hope to be fully on-board when the next confirmed call is noted. The shares that I chose will be undervalued and growing their earnings both aggressively and safely.
Santa can still arrive and the market can bottom out quite quickly. It can happen (a green light buy) as quickly as the middle of next week, but no one really knows.
Here are some things to do:
- As a matter of priority, watch the market timing video on VectorVest UK this and every weekend. Last weekend, the turn down was forecast in an excellent presentation.
- Within VectorVest US, Dr DiLiddo writes an essay on markets each weekend. It’s a great way to stay in touch with the major trends shaping the economies of the world. All VectorVest UK subscribers are given VectorVest US as a free addition to their membership. If you cannot find the essay, please call the toll free number (0800 014 8974). Remember that the strong silent type has only ever worked for Clint Eastwood.
- Keep careful written notes each and every day on the position of the MTI and the Color Guard. In this fast-paced world, it’s so easy to miss a few days and miss the chance to get on board at good levels. The turn can be monitored very quickly these days in a spare moment on your mobile device.
If you are holding stocks, please watch those stops. The objective of trading is to have enough money to trade tomorrow.
Friday 12th 2014 at the London close.