2-23-2012 Comments

We beging the day with no change in Market Exposure at +5, fully invested. Distribution count remains at 3 in a trailing 25 day window.
Looking forward to any likely sell signals the possibilities are (1) S5 close below the 21-day ema should we see a market pull back, (2) Two more days of distribution causing an S3 (Full Distribution Count minus 1). We will lose one day of distribution that occured on 1/26/12 on 3/1/2012 (one week from today) so this possibility is looking like an unlikely occurance unless the distribution begins right away.
The NASDAQ 21-day ema has been trending above the 50-day for 32 days now. On Monday March 5 if we have not seen an S5 signal we will enter a Power Trend. A Power Trend is designed to keep you in the market through a likely pull back that often occurs after such a powerful uptrend. A Power Trend if it occurs will put a floor of +1 (30% invested) to the portfolio exposure. On a probabilistic basis 21-day above the 50-day for 40 days indicates more strength to follow and it pays to stay engaged through a pull back.

The high price of oil seems to be dragging the Dow Transport Index under the 50-day. This is something to be watched. High oil prices have stopped market advances in the past, or at least contributed to slowdowns. Couple this with the possibility that Europe is sliding into a recession and we have market conditions to be concerned about. Perhaps this is just the wall of worry that the market will continue to climb.

As always we watch our portfolios and the action of leading stocks for signs of weakness. The pace of breakouts has slowed. HLF broke out yesterday.