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Coolhand's Market Analysis

Tenuous Buy Signal?

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by
coolhand
, 02-21-2012 at 05:40 PM (3599 Views)
I didn't have a lot of time to listen to any financial news today, but what little I did hear appeared to center on the DOW possibly pushing past the 13,000 mark. It did manage to do that today, but it couldn't hold that level into the close.

Transfer 5/25 for 5/26/04-seven-sentinels-signal-png

The Seven Sentinels remain in a buy condition, but the signal is not exactly robust. Still, a buy signal is a buy signal. One thing that is robust though, is the market. And it's not easy to gauge exactly when a sell signal might get triggered by the Seven Sentinels in a market that continues to levitate the way this one does.

I believe it has to do with liquidity and sentiment. Central banks have been working to stave off the financial crisis in Greece and that may have something to do with our own market's bull run. Sentiment has also been largely supportive of prices for weeks. Just look at our own sentiment survey.

So if that liquidity continues, the downside may remain limited. Also, everyone and their brother "knows" this market is ready to turn at any time. And the bears tend to be quick to short every time it appears the "top" is in. That's when bearish sentiment spikes and the market pushes higher on a short squeeze.

So while the Seven Sentinels do cling to a somewhat fragile buy signal, there are forces at work that could delay a sell signal longer than one may think.

Here's one chart:

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BPCOMPQ has been on a sell two days in a row, but it's mostly a sideways sell signal skirting along just below the upper bollinger band.

Now if we get any follow through downside action a sell signal may get produced, but we'll have to wait and see if that in fact happens. It's hardly a given in such a strong market.

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  1. mrubin78's Avatar
    Ok, since I'm new here for the past few months and been paying attention to your system. How can it be considered a 'buy' signal if there's number of 'sell' signals outnumbers 'buy' signals like above? Help me understand the system. Thanks...
  2. coolhand's Avatar
    Quote Originally Posted by mrubin78
    Ok, since I'm new here for the past few months and been paying attention to your system. How can it be considered a 'buy' signal if there's number of 'sell' signals outnumbers 'buy' signals like above? Help me understand the system. Thanks...
    From the Seven Sentinels developer...

    One indicator by itself could trigger then fail. 3 or 4 together still may trigger then fail, but less often. But there's an elegant symbiosis inherant in the Seven Sentinels: When all seven trigger at once each supports the other and the market itself has truly established a trend...The market has then crossed the Rubicon." And every bit as important- this symbiosis tells us when they have NOT signaled a change in trend. While others become convinced that the top is in, our Seven Sentinels keep us focused on the uptrend in progress.
    Updated 02-22-2012 at 06:55 AM by coolhand
  3. mrubin78's Avatar
    Quote Originally Posted by coolhand
    From the Seven Sentinels developer...

    One indicator by itself could trigger then fail. 3 or 4 together still may trigger then fail, but less often. But there's an elegant symbiosis inherant in the Seven Sentinels: When all seven trigger at once each supports the other and the market itself has truly established a trend...The market has then crossed the Rubicon." And every bit as important- this symbiosis tells us when they have NOT signaled a change in trend. While others become convinced that the top is in, our Seven Sentinels keep us focused on the uptrend in progress.

    Thanks since I'm still learning...Of course I'm learning from mistakes I made recently. Now I can see why and what went wrong with my investment strategy and decision-making.

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