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MDM - Model switches to Neutral on February 23, 2011

Due to the number of distribution days and recent action of leading stocks, the model has switched to neutral. You should sell any ETFs you own. For those who bought on the February 1 buy signal, your trade should be roughly flat, that is, neither much of a profit or a loss. The model thrives on trending markets, and recent action indicates it is better to move to the safety of the sidelines for now.


Just because the model has gone neutral does change the way you should handle your stocks, but always obey your sell stops.


Note, in this quantitative easing environment, a sell signal is temporarily postponed. It is better for us to stay safely in cash while watching which way the market wishes to go during this bit of turbulence, than to risk going short only to see the market quickly rebound as it has done so many times since March 12, 2009, the first buy signal that kicked off this QE (quantitative easing) driven bull market. Further, even if the market should continue to fall over the short term, being on the sidelines not losing money outperforms a falling market.

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