ETF Timing at a Market Top in the S&P 500 ETF A Time When You Do NOT Want to BUY
9-16-2010: An ETF Timing Article about when to BUY and when NOT to BUY when you reach a Top on a Chart.
ETF market timing signals say this is NOT the time to buy the SPX ETFs (such as S&P 500 ETF, SPY). When a market has come a substantial "price distance" as it has over the past 10 market days AND it then proceeds to develop a "holding pattern" / sideways consolidation JUST BELOW prior major resistance as it is now, it almost always trades DOWN AT LEAST 2-3% in the next 1 to 3 days.
In other words, we are about to experience a day similar to June 22, 2010 at a minimum. That day, the markets fell back 1.61%. And that time, it turned into a deeper correction taking us to the major July low.
What SHOULD the market have done if it wanted to in fact break out cleanly based on ETF timing signals the first time? It needed to go right up through the resistance market by the prior tops of June and August. And then? Then it could have consolidated ABOVE, not BELOW the resistance level.
Are you 100% sure Dave?
Nothing is 100%, but this one is pretty solid if you look back at past ETF market timing history for the S&P 500 ETF, SPY, so the odds are fairly good that AT LEAST the next 2-3% move will be DOWN not up.
So what to do? You wait. You wait until the SPX gives you an ETF timing signal that says BUY. That would be a clean strong move up through the resistanace at the June and August tops. When you see that, your odds have gone up that the rally will "stick."
If we see that kind of clear move above resistance now, that would negate the prediction of this article. That's just the way ETF market timing works. It is a percentage game and when you have the percentages on your side AND set a stop loss plan that limits your losses, you win more than you lose and YOU MAKE MONEY. That is the holy grail of investment and ETF market timing.
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