MDM - Sell signal

Published : November 16 2010 at 12:13 ET

The model has switched to a sell signal. These are unusual times. The model usually issues a sell signal standby when it reaches 5 distribution days within a rolling 20 trading day timeframe. It has preempted this due to the following which also carry weight with the model:

1) Leading stocks overall have been hit harder than the general averages over the past few days.

2) There were 3 distribution days in 4 trading days. This is a sign of significant selling pressure.

3) Sovereign debt problems in Ireland. This is helping to support the dollar by way of flight to quality as the dollar still remains the fiat currency.

4) Fears of China hiking rates yet again. While China's rate hike on October 19 did not derail the uptrend in the US markets, a second hike adds weight to slowing down China's economy, especially their bubbling real estate market. With Shanghai having been clocked in the last two of three days, first selling off -5.6% then another -3.98%, this has served to put an intermediate term top in various commodites including precious metals after their sharp uptrend. Expect a basing period to ensue.


Inverse ETF suggestions to follow.


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