There is not much to say about this past week. The S&P 500 was up only 0.08% for the week, but it was up. This marks the 4th consecutive week in positive territory. Therefore, there is approximately an 88% probability that this week will close lower than it opens (or a 12% probability to close up). However, the "Sentiment Signal" (Chart 1) continues to indicate that one should be buying incrementally during this period. The expected end of the buying period is indicated by the green dashed line which represents the prevailing trend (expect buying period to end around March 15th).
The "Super Signal" trend (Chart 2) has also shifted towards improvement and is no longer trending towards formation. Currently the signal is at 4.12 an improvement over last week from 3.95 (the 2nd week of improvement); formation in 2008 occured at 3.05. If this trend shift continues it will indicate that it should be relatively safe to remain invested in equity markets through 2012.
Chart 3 below displays the expected weekly trading range for this week between 1,265 and 1,368 (or +/- 3.91%). A drop below 1,265 would be considered a significant move and a good buy opportunity.
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| Chart 1: 01/27/2012 S&P 500 Sentiment Signal (click to enlarge) |
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| Chart 2: 01/27/2012 S&P 500 Super Signal (click to enlarge) |
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| Chart 3: 01/27/2012 S&P 500 Weekly Expected Trading Range (click to enlarge) |
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