In such a condition, when the 20DMF is in CASH, it looks at the short conditions (Upper panel signal in negative territory and Average inversed ETFs > 4%). Since these were met, the 20DMF turned short.
If we had closed below the -70 level, then the 20DMF would have stayed in CASH but would have internally turned into a "BUY wait mode."
Of course, the SHORT conditions stated above existed some days ago, but at that time, the 20DMF was in a BUY mode. The transition from BUY to SHORT is different from the transition from CASH to SHORT. Do not forget that the lower and upper panel of the 20DMF indicators are showing a fixed situation, but the 20DMF model itself - how the signal is interpreted - tries to catch the dynamics of the market. Therefore, the model will interpret the signals differently depending on the state it is in.
Looking at the upper panel of the "Number of days until a buy signal" indicator, we can see that we decisively moved above the 50% ratio. This indicator is a good measure of the market's move. It is slower than the 20DMF, but when it issues a signal, the signal is less susceptible to failures. The drawback is that it misses many small signals that the 20DMF catches.
If we now look at the sectors situation as measured by the ETFs, we can see in the table below that we are decisively in a SHORT mode.
However, since we are very close to the oversold territory, we should be prepared for a reversal and hence we need to look at the long side of the market. A market reversal would first be detected by looking at the sectors with the worst price relative strength. These sectors are down the worst because they have been sold the most. Short sellers will usually be the first to cover (buy) in a reversal.
To study this, I look at the "Worst stocks" list in the repository file, where I can find the sectors ranked by price RS, and then I look at the "Sectors" sheet, where I can see the sectors that have been attracting the most money in the past two days.
These two lists are shown below. We can see that three of the worst sectors attracted money. Is this information decisive proof that short players are covering? Three out of 12 is 25%, while about 20% of all the other sectors attracted money (a rather similar proportion.) This means that a short covering wave is not present yet.
Since EV is good at detecting unusual situations, I would like to draw attention to the following stocks showing accumulation when compared with others in the same sector:
Gold miners: GG/ABX/NEM are among the largest miners. If large players continue accumulating, the GDX ETF will reverse up.
Oil Shale: SM is the only one under strong accumulation.
Refiners: TSO/WNR are finding a bottom. SUN is under accumulation.
Pascal
