Drained indicator

Maybe it's just me, but I am drained.  When you make the statement over and over again that the market is in need of a rest, and the market continues to grind upward, day after day, it can be disheartening.  It is much worse when the market is relentlessly falling and you are calling for a bottom, but this can get to you as well.  But there is a silver lining in this feeling.

I have said many times that I rely on my indicators to make my decisions and that I rarely, if ever, base my decisions on a gut feeling or hunch.  Perhaps if I had more free time I could sit quietly and get in touch with my inner voice, but it ain't happening any time soon.  However, I do have a few unorthodox indicators that can be quite accurate.  One is the email indicator.  When my email gets overly nasty, or excessively congratulatory, I know things are about to change. 

The other is the feeling of being drained.  When it seems like I can no longer stand being on the wrong side of the market, I know it is getting close to changing.  That is where I was Wednesday afternoon.  When the Dow was up over 90 points again during the afternoon I had that, 'I give' up feeling.  Luckily I know enough not to act upon it.  That is actually a good sign for my market position. 

The Dow did end the day up 89 points but the S&P 500 and small caps did not exactly share in the excitement.  Can someone who is bearish say the cup is half full or is that only a bullish thing?  Let's take a look at the chart.


                                    Chart provided courtesy of www.decisionpoint.com

There is nothing terribly wrong with this chart.  It is currently above the 20-day moving average, which is above the 50-day, which is above the 200-day.  All good.  The upward trend seems to be intact.  All is well until it isn't.  From an overbought standpoint, the intermediate term is waving a yellow flag.

I have never studied this (I'm saving my spare time for that inner voice experience) but I have noticed that when the S&P 500 gets 5% or more above the 200-day moving average, we tend to see a pause.  At the mid-January high it reached over 6% above and we have paused some as it is currently down to 4.5% above.

The new AAII Investor Sentiment Survey came out Wednesday.  45% of those polled said they were bullish.  33% said they were bearish.  Nothing too telling.  A 2 to 1 ratio is excessive.  This isn't.  Interestingly, both of those numbers are higher than last week's.  We have more bulls and more bears.  Fewer neutral folks out there.

That’s all for today.  Currently 100% G fund.  Thanks for reading.

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