MDM - Update 12/7/10
This topsy turvy whipsaw market has been the name of the game since mid-November, first with the general market and leading stocks selling off hard in mid-November, then almost immediately turning around and springing toward new highs. We have thus gone with the turbulent flow, and have continued to recommend individual stocks even while the model was on a neutral signal since the model is designed for ETF investment.
That said, today's market staged a reversal off its highs. This qualifies as a distribution day. With enough distribution days under the market's belt, the model is hereby on a sell signal standby, meaning it is still on a buy signal, but should the NASDAQ Composite go below today's low in subsequent trading days, a full sell signal would be issued. So for those who bought ETFs today, your losses should be minimal as the sell signal would trigger at 2596, ahead of the fail-safes, which were set at 2583 and 2566. Remember, to bag the big trends, expect little losses along the way. Part of the strength of the model is that it can quickly reverse course, usually within minimal loss, if necessary.
As for precious metals, they had a reversal today but this is certainly not the first time. As long as the federal reserve continues to print money and QE2 continues its course, the long term uptrends in the precious metals should continue. Of course, pullbacks are part and parcel of uptrends, and based on today's market action, it would not be surprising to see.
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