Last Friday, my macro indicator fell significantly to -42. As I mentioned in my last post, I would consider shorting the market to further reduce my equity exposure if (1) my indicator continued to decline, and (2) the S&P formed a negative weekly RSI divergence. Please note that because of the precarious nature of markets (in general), I don't plan to be "net short" -- in my opinion, that would be too risky. Furthermore, I don't foresee placing one large short position; rather, I would build a short position incrementally as the RSI divergence forms -- preferably, while the market rises.
My tentative plan is to reduce my equity exposure by about 50% with "shorts." At this point, I would consider placing only a relatively small short trade (approximately 25% of my total planned short position). Going forward, I will post what the S&P needs to do to trigger the all important negative divergence. For this week, the S&P would need to close below 2873.34 on Friday. Stay tuned......
Follow signals from the Prophet4Traders system to identify turning points in the U.S. stock market
The purpose of this site is to share results of a trading system that I use for identifying both long-term and short-term trading opportunities. I take the time to do this because of my passion for investing and helping others succeed. The system helped me avoid the "Crash of 2007/2008" and every major correction since then. The cornerstone of my trading system are analyses of market liquidity to gauge longer-term market sentiment and equity and index options (put/call ratios) to identify short-term entry and exits.
This site is for information purposes only. Past performance of the trading system is not a guarantee of its future success. Please consider consulting a qualified investment adviser before making investment decisions.