Last week, our indicator gave us SELL signal immediately followed by a BUY signal. Why did this happen? Concerns!!!
We all know that market has been very volatile and risky in past couple of weeks, especially after the drop in early August. Typically, after every big drop in the market, next couple of days/weeks tends to be volatile. But then why is our indicator giving us fake signal? What does BPNYA Index measure and why we use it as an indicator for our markets - - In simple words, BPNYA Index measures how many stocks listed on NYSE are going up vs going down (we will not go into details as to how it is measured...) - Hence BPNYA Index is considered as Market Breadth indicator, we can think of BPNYA Index as "thermometer" of the NYSE telling us about the health of the market - Prior to last week, more stocks were going down vs going up, hence the SELL signal. In last week, more stocks were going up vs going down, hence the BUY signal. Since BPNYA was very close to EMA(30), we got subsequent SELL & BUY signal What does this mean for us!!! Below NYSE chart shows how market is moving in a channel and break of the channel will decide market direction... Still confused!!!
If you followed our market timing tool (included in the downloadable spreadsheet), it gave us "NO SELL" signal since EMA(30) is flat and not moving down... So what did we conclude? - Our analysis gave us appropriate signal. Even though BPNYA gave us SELL signal based on our historical analysis, we derived it was "NO SELL". - The system works and NO need to PANIC. Remember, no system is perfect and we will get fake signals once in a while. The key is to limit losses and preserve capital. Comments are closed.
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