(Click on charts for easier viewing.)
(Then click the large white X in the upper right corner to return to the blog)
(Then click the large white X in the upper right corner to return to the blog)
Daily Market Snapshot
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| Market in Correction |
Chart Analysis
Nasdaq Composite Index
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| Expect lower price ahead. |
Market Direction Model
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| Our Impulse Indicators (the left side of the chart) represent significant spikes in buying or selling activity by market participants. A cell painted blue represents a strong buying surge, while a cell painted red represents a strong selling surge. Ian Woodword, the creator of the MDM, calls these impulse indicators Kahunas. They come in two sizes, big and small. Little Kahunas are either light blue or light red, whereas Big Kahunas are dark blue and dark red. The darker shades represent extreme levels of buying or selling. You clearly can see how these impulse indicators set the tone for the market for many days to come. Just look at the MDM (the right side of the chart). On May 4th an entire row was painted with both red or dark red Impulse Indicators. Notice that the MDM subsequently turned red, bearish, for a full two weeks. |
The Woody Indicator
(Volatility Indicator $VIX)
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| Fear and Greed rule the market at extremes. This is where the most money is made or lost in the market. The Woody Indicator is based on volatility and effectively measures and magnifies the emotions of market participants. Fear is generally accompanied by higher volatility. |
The above analysis confirms what you have been hearing in the nightly news of late; the market is the midst of a full blown correction. The Dow Jones Industrial Average is now negative on the the year and the Nasdaq Composite Index has declined by a full 10% as of Friday's close.
Above I provided you with a little more indepth review of the inter-workings of our very effective Market Direction Model. I do this to help you gain at least a minimum understanding of the methodologies I employ and to hopefully help instill greater confidence in our processes.
Our Market Direction Model is Keeping us on the Right Side of the Market.
Our Impulse Indicators gave us a warning shot accross the bow in early May. This was my signal to begin reducing risk exposure in all GWM Model Portfolios. Going into yesterday's big decline all Model Portfolios were already positioned very defensively in high quality bonds, utilities (including phone companies) and lots of cash.
Our Impulse Indicators gave us a warning shot accross the bow in early May. This was my signal to begin reducing risk exposure in all GWM Model Portfolios. Going into yesterday's big decline all Model Portfolios were already positioned very defensively in high quality bonds, utilities (including phone companies) and lots of cash.
This blog post does not constitute an offer of investment advice. This blog is only provided for educational purposes. Please read the Important Blog Disclosure posted in the right channel bar.
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