Today is tomorrow. Is John’s green flag turning yellow?
Today Was Big, Tomorrow Bigger
Courtesy of John Nyaradi of Wall St. Sector Selector
Today [Yesterday] was big with the Fed Open Market Committee saying “The economic recovery is proceeding” and “the labor market is improving gradually,” and “financial conditions have become less supportive of economic growth on balance, largely reflecting developments abroad.”
Interest rates remained unchanged as expected and the big news was the record drop in new home sales, declining -33% to 300,000 and the fewest new home sales since 1963.
On the upside of the housing market, the home builders’ index climbed today in contrast to the new home sales reports. Tomorrow is the all important jobs report and earnings from tech heavyweights Oracle, Palm and Research in Motion.
On a technical basis, markets are vastly oversold and sentiment is bearish reflecting the current mode and so if we’re going to get a bounce, it should be imminent.
Our signals remain on a “buy” signal but with less commitment as each down day passes.
Typically when we switch to “Green Flag” we will see the response come within a week, although remembering back to the end of March when we went to “Red Flag” the market climbed for nearly a month before reversing down sharply in the May/June correction that we were able to fully exploit.
So I would expect to see some upside here or it will soon be time to fade this position a little and reduce risk in the event this forecast rally doesn’t materialize.
Stay tuned.
John Nyaradi publishes Wall Street Sector Selector, an online newsletter specializing in sector rotation trading using Exchange Traded Funds. He is also Senior Vice President, Marketing and Private Client Services for ProfitScore Capital Management, Inc.
John is offering readers a 30 Day Free Membership and Free Special Report, "Slay the Dragon Within: How to Make Your Emotions Work for You Instead of Against You." His service provides signals for going long and short using standard and leveraged ETFs and teaches readers how to seek profits in both up and down markets. Free Membership Subscribers also get access to the Wall Street Sector Selector Monthly Webinar and a second Special Report, "How To Avoid the Buy and Hold Trap." – Ilene
