AlphaDow Barometer: IF the A/D Line, UTIL MA>27wk and one more thing happen....go long

Sean Gallagher Has Had Over 50 Followers Rank: 28 Followers: 55 Votes: 25 Years Member: 7 Last Update: 11 February 2016, 19:59 Categories: ETFs
General Market Commentary
Canadian Stocks

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3 out of 5 'systems' in our big picture regime filter are BEARISH as of Jan 8th (see chart below). This suggests that further weakness in the U.S. and global stock markets may be ahead. Prudent portfolio management dictates that we raise stops and exit long positions in stocks that are under-performing the overall market. Wait for the 3 bearish indicators to turn bullish before deploying capital full scale.

The Call For The Week of February 8th:

The selling stampede continues as crude oil slips, North Korea launches ICBMs, Chinaâ??s FX reserves fall to 2012 levels, and the U.K. considers leaving the EU. Trying to catch a falling knife in a bear market can be painful. Continue to focus on capital preservation.

AlphaDow is a 100% mechanical Inter-market Strategy consisting of three trend following indicators, one breadth and one based on interest rates. Add up the numbers in the dots in each indicator pane. A BULLISH state will occur when the count reaches 5 out of 5.

To turn bearish, the Dow Utility Average 27wk MA has to move 2.5% below 577 (recent high). The other indicators must fall below their respective moving averages on a weekly close.

Our mechanical systems:

Turned BEARISH on the U.S. stock market on 8th January '16 (3 out of 5).

Turned BEARISH on the Canadian stock market (2 out of 5) as of the 5th June '15.

Turned BEARISH on Gold as of July 2nd '15.

Turned BULLISH on Bonds (TLT) as of Dec 28th.

Less

1. AlphaDow -- Five points possible. 5=BUY 2=SELL. Use SPY or the strongest (Alpha) ETFs.

Bullish when 5 out of 5 are true (+1):

$SPX is trending up (trend is up)

Advance/Decline Line is trending up (buying power)

$TRAN is trending up (Dow Theory confirmation)

Utility Average MA rises (interest rate sensitive Utilities lead)

Bonds are trending up (interest rates are low)

74% winning trades (13/18) since 1970. Beats buy and hold with less volatility.

Past performance is no guarantee of future results. This is not investment advice, but is for educational purposes only. Consult your investment advisor for additional information regarding suitability, fees, expenses and short term trading costs.

2. AlphaDow TSX -- 'Canadian Dow Theory' -- send feedback for current ETF Advisor Portfolio

Bullish when 5 out of 5 are true (+1). Stay invested until 3 turn false (+0).

$TSX is trending up (trend is up)

Advance/Decline Line is trending up (buying power)

$TRAN is trending up (Dow Theory confirmation)

Utility Average MA rises (interest sensitive)

Bonds are trending up (interest rates are low)

67% winning trades since 1980 - beats buy and hold with lower volatility. Buy and Hold the strongest ETFs or stocks when in BULLISH state. Otherwise hold cash or bond proxy.

Past performance is no guarantee of future results. This is not investment advice, but is for educational purposes only. Consult your investment advisor for additional information regarding suitability, fees, expenses and short term trading costs.

3. AlphaGold - Intermarket System 3=BUY, 1=SELL (GLD or GDX)

Bullish when all three systems are on a BUY. Score +1 for each of the following TRUE statements:

1. US Dollar Index 12 wk EMA

2. Oil > 12 wk EMA

3. Dow > 48wk EMA

Buy Gold (GLD) if score is +3 (all three TRUE). Stay invested (long GLD or GDX) until 2 systems turn false (0).

14.8% CAGR with 13.8% max drawdown 1954-1995. *Source: Wall Street Journal - Divining Gold's Next Move 2006

Past performance is no guarantee of future results. This is not investment advice, but is for educational purposes only. Consult your investment advisor for additional information regarding suitability, fees, expenses and short term trading costs.

4. AlphaBond - Intermarket System 3=BULL, 1=BEAR (TLT)

BULLISH on TLT when 3 systems are on BUY. BEARISH when count drops to 1 :

1. Fidelity Financial RS is positive = +1

2. Utility RS is positive = +1

3. Chemical RS is negative = +1

4. Nickel ROC is negative = +1

Financial assets and utilities lead. Inflation is bad for bonds. Source: Formula Research Intermarket Bond Strategy.

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