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Wednesday, February 21, 2007

Stocks Peaked?

Here is an updated view of my "Magic Potion" indicator. There is no magic to it actually, but just a goofy name a gave it to make fun of myself. As you can see it has returned to the green, indicating a buy. However, based on the computation of it, if prices stay where they are the rest of the week, it will go back into the red.

There was never an official sell signal generated during those 3 red bars because the other components of the timing system did not confirm it. They are all presently confirming any sell signal in the underlying, if the week closes with all of the components where they are as of this posting. It is February, so a sell signal now should just be used to get flat. In general we do not want to be aggressively short during the first two months of the year due to seasonal effects.

If march rolls around and the indicator is indicating a sell at that time, we will have something to act on. Until then, the trend is still up so no need to do any shorting.

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