Last week the S&P 500 surprised many by posting a 7.39% gain closing at 1,244.28. It closed above the expected trading range of 1,110.49 to 1,206.85 (as indicated in Chart 2 below). Although we remain in a "Tentative Buy Period", as indicated by the "Sentiment Chart" (Chart 1 below) there were no buy opportunities last week since the markets closed up or above the expected trading range every single day (for further explanation see
Investment Strategy Page). However, I am growing concerned by the trend towards the formation of a "Super Signal" (see chart 3 below). The increased volatility of the market, with the expected weekly range now above +/-4%, adds further credence to these concerns.
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| Chart 1: 12/2/2011 S&P 500 Sentiment Chart (click on chart to enlarge). |
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| Chart 2: 12/2/2011 S&P 500 Weekly Expected Trading Range (click on chart to enlarge) |
In Chart 3 below, I have indicated that the formation of what I call my "Super Signal" (see older posts) is growing more and more likely. If the trend continues, it is likely that a "Super Signal" will form early January. With all of the bad macro economic news and high volatility, the thought of a broad market crash in the near future does not seemed very far fetched.
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| Chart 3: 12/2/2011 S&P 500 Super Signal Chart (click on chart to enlarge) |
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