MDM - Model switches to BUY on August 26, 2013

Published : August 26 2013 at 9:45 ET

The model has switched to BUY. With positive action from stocks on which we sent reports to members on Friday, and continued positive action today by leaders including TSLA, this could hint that the market has found its floor and will move higher from here on a tapering of QE being delayed for longer than expected. The S&P 500 also managed to close just above its 50-day moving average and is moving higher at present.

One Fed governor said the tapering of quantitative easing should be delayed since the Fed has room to wait given low inflation. Another Fed governor said tapering should start in September. Such dissenting opinions creates what we call "schizofedic" market action, or the inability for the market to trace out a discernible trend. Nevertheless, buying pressure points to a resumption of the uptrend, even if short-lived.

Markets are forward-looking by typically 5 to 9 months, so the model will be on lookout for increased selling pressure.

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