All it takes is a week and market scenario changes. Last week was very volatile with wide swings as expected, but fortunately our history teacher (BPNYA Index) guided us well and we were out of the market before all the action unfolded. Remember, all we are trying to do is increase our "odds of winning" and "protect our gains" as well as avoid "major losses". Follow the guidance provided by BPNYA and in most scenarios we should do well... Below BPNYA chart shows our SELL signal was triggered before the actual action in the market, thereby allowing us to protect our gains. During last couple weeks, we have been mentioning that when BPNYA crosses EMA(30) from above is our SELL signal. YES, that's a basic/generic SELL signal but if you followed the signal in spreadsheet then you will find that when BPNYA is above 70 mark, we suggest to take EMA(30) crossing MA(50) from above. WHY? Its based on analysis of data, which provides confirmation. Since we use this technique for long term funds, we want to stay in the market and ONLY get out at confirmation. In below chart, it is clear that BPNYA and EMA(30) crosses MA(50) at about same time providing this confirmation. Hope this clears any doubts.... Below NYSE Index chart also confirms that the current uptrend is broken as NYSE dips below MA(50), also as we pointed out divergence, market was bound to go through a correction/sideways action in near future. The real question is "how long" will this action continue? Why should we bother as to how long will this pullback/correction will continue! Instead, we should simply follow what BPNYA is telling us, Isn't it!!! Our aim is not to predict markets but rather use information to help us make intelligent investment decisions. For now, DO NOT fall for any trap. Earnings season started last week, hence market will experience wide swings as volatility tends to increase during earnings season. Most likely we shall see market making attempts to go higher followed by down days and vice-versa. This action may continue for another 2-3 weeks, by then market direction will be determined and it will also provide excellent opportunity.
Stay alert and do not fall for any traps... Comments are closed.
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