Saturday, January 22, 2011

Reliable timing indicator...

One of my favorite market timing indicators went red after 6 weeks of green. Although this indicator is not perfect at picking tops and one more week of red will be needed for confirmation it is a warning sign after 6 weeks of strength in the markets.

Another thing that worries me is that although the overall markets were able to hit new highs during this last rally. This indicator was unable to do so after making higher highs and higher lows off the June-July lows in 2010. 

This leads me to believe that there is a strong chance of a sharp correction in the coming weeks. So play it careful until the markets show a definitive trend.

Good luck and good trading!

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