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MDM - Model switches to Sell, April 10, 2012

With 6 distribution days logged on the NASDAQ Composite out of 7 trading days, and today looking like another distribution day, and with European markets having broken their uptrend such as the FTSE 100 (United Kingdom), CAC 40 (France), and DAX (Germany), the model has switched to a sell.

European markets have been the center of attention and, while the US markets have been leading the way, weakness in European markets can have a stalling or mild correctional effect on US markets.

Currently, ETFs such as IEV, which corresponds to the return of the S&P Europe 350 Index which is a good representation of leading bourses in Europe, are showing greater and greater lag relative to the US market. Price/volume action in leading European bourses is showing distribution, further confirming the renewed worries about Europe, particularly on Spain and Italy, as denoted by rising bond yields and further weakness in European markets as recently as today (Thursday). In such situations, emerging markets in Europe tend to suffer the most, thus our recommendation for ETF EDZ shown below as one possibility.

Normally, the model would switch to a sell signal standby on its fifth distribution day, which was on March 30, but due to quantitative easing factors (in its various forms) accounted for by the model, and the strong action of leading stocks (AAPL hit new highs on April 3, PCLN hit new highs on April 4, etc), the model switched to a neutral signal on April 4.

Today, on April 10, given the price/volume action in markets factored in by the model, it is switching to a sell.


Suggested inverse ETFs:

1-times inverse

RWM - Russell 2000 small cap 1x bear. It should approximate 1x the inverse of the Russell 2000.

2-times inverse

TWM - Russell 2000 small cap 2x bear.

3-times inverse

TZA - Russell 2000 small cap 3x bear.

EDZ - MSCI European emerging markets index 3x bear. Note, there are 1x and 2x equivalents but they are too thin so we would suggest position sizing in EDZ according to your risk tolerance levels.

This information is provided by MoKa Investors, LLC DBA Virtue of Selfish Investing (VoSI) is issued solely for informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. Information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of available data. VoSI reports are intended to alert VoSI members to technical developments in certain securities that may or may not be actionable, only, and are not intended as recommendations. Past performance is not a guarantee, nor is it necessarily indicative, of future results. Opinions expressed herein are statements of our judgment as of the publication date and are subject to change without notice. Entities including but not limited to VoSI, its members, officers, directors, employees, customers, agents, and affiliates may have a position, long or short, in the securities referred to herein, and/or other related securities, and may increase or decrease such position or take a contra position. Additional information is available upon written request. This publication is for clients of Virtue of Selfish Investing. Reproduction without written permission is strictly prohibited and will be prosecuted to the full extent of the law. ©2024 MoKa Investors, LLC DBA Virtue of Selfish Investing. All rights reserved.
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