Keystone's BPSPX Indicator Market Buy Signal
Keystone's BPSPX Indicator is regularly updated on the Other Market Signals page. In a surprising development yesterday, the bulls eek out a Market Buy Signal by one thin dime. The BPSPX signals a market buy, or sell, signal when price reverses six percentage points. In November and December, the market bottom was confirmed when the BPSPX moved from 58 to 64. From there it was off to the races for the bulls. In March, the top occurs at 84.40 so the Market Sell Signal triggered at 78.40. The markets sold off in April but the bulls will not let the bears shine. The central banker easy money remains powerful and continues to pump equities higher. The near-term bottom a few days ago is 75.2. Thus, 75.2 + 6 = 81.20. Yesterday's print is 81.40 so a Market Buy Signal occurs.
This is not an expected development for the BPSPX. Typically, once the downside, or upside commitment is made, the markets should continue along in that fashion for a few weeks, but the bulls changed all that on Friday. This move is very suspect and may be short-lived. However, since the signal is a market buy now, the bulls must be shown respect, and the bears cannot shine again until a six percentage-point down move occurs to 75.40 (81.40 - 6 = 75.40). This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.
As someone new to your site just a little confused--
ReplyDeletethe BPSPX indicated a buy--but your NYMO chart indicates a top and your SPXA150R is also indicating a top-
What are the differences and why is the BPSPX indicating a buy ,while all your other indicators are saying a top is in and the markets should be headed down
Keystone, your posts seem to contradict one another. One suggesting a market top is in or imminent, one saying the bulls are off and running again. Don't get me wrong, I don't really believe anyone knows what is going on, but someone is bound to be right,........... eventually. A colleague forwarded me following sentiment chart http://screencast.com/t/PM3LGmmmQ . Bullish Sentiment is near historical LOWs, yet the market is at an all-time HIGH. What??? Copper down 20-30% in recent months and the market up? This is another example of 100% opposite of the norm. Conclusion: all of the customary indicators, sentiment, TA or whatever folks have customarily used to help influence decisions have lost their credibility in recent years thanks to HFT and the FED. We are experiencing such a flood of contradictory indications that the market could explode higher or implode lower at any time. No-one knows. Look at the recent reversal in the DAX for goodness sake. Cash sounds good to me right now.
ReplyDeleteGreat question Robert and Eric, many others are probably scratching their heads at the same thing; NYMO and SPXA150R indicating market top but BPSPX reversing (by a single hair) to give the bulls the nod again. As also mentioned, some sentiment surveys such as AAII show low bullishness, not the euphoric bullishness that identify prior tops (although the AAII is not the best indicator by any means, it will show uber bearishness but markets will keep going up, and visa versa). Lots of folks will talk a story but it is always more important what they do. Watch the VIX and CPC as indicators of sentiment. Pundits may wax worry and tell the AAII that they are not bullish and they are worried, but they are the same traders buying the long side ten minutes later. The drops in volatility show lack of fear and complacency.
ReplyDeleteBut for the question above, the short side carries more clout. The BPSPX reversal favoring bulls only printed by a dime above the six percentage-point reversal requirement and this was due to Friday's wild bullish orgy. The BPSPX is more of a lagging and confirmation signal as well. Many indicators on Keystone's Signal pages are in conflict; sometimes paying attention to time frames, days, weeks, months, years, cyclical versus secular, helps sort things out. It looks like the bears should receive their turn moving forward but they have been left at the altar several times this year already.
Cash is a very smart and prudent position. And yes, cash is a position, do not let anyone tell you otherwise. If there was ever a time that a trader who typically only plays the long side and does not typically like to short the market would need to rotate into cash, it is likely now.
Meant to say AAII may show uber bullishness but markets keep going up or uber bearishness and they keep going down.
DeleteThe Fed and BOJ are causing mixed market signals but things should revert to the expected relationships at anytime moving forward. The dollar/yen is key. At 99, bulls win above 99 to 100 and higher. Bears win if the BOJ is running out of gas, and the dollar/yen stays at 99 and/or moves lower.