Today the Weekly Trend System went from long to short. Now before anybody reads too much into this, let's say what this does and doesn't mean:
1) This means that the conditions have been meet for a top signal
2) Having a top signal in place does not guarantee there will be a top
From my backtests with the Weekly System, it:
a) issued a few sell signals without actual tops between mid-80s to late-90s
b) issued a sell signal in mid 99 and it issued a buy in late 99 for a loss (no actual top)
c) issued a sell in late 2000 and a buy in late 2001 for a gain (actual top)
d) issued a sell in mid 2002 and a buy in late 2002 for a gain (continued selloff)
e) issued a sell in mid 2006 and a buy in late 2006 for a loss (no actual top)
f) captured most of the 2007-2009 selloff (actual top)
Getting a sell signal is far from a 'lock' in forecasting a major top. If I tried to tune out all the noise the system would be so slow to respond that the bear market correction would be halfway done before a sell was issued because they move so fast. So the system is set up to filter some 'noise' but is not so insensitive that it can't be faked out during volatile uptrends.
I certainly am NOT inclined to call 'the top' of this cyclical bull market since 2009 based on this weekly sell signal.
In fact, if I had to make a call right now, I would say this is closer to the 1999 or 2006 corrections in terms of analogy. That is assuming of course that this pullback is forming into an actual correction (some wave of Intermediate degree), which is by no means guaranteed at this point.
But I am just reporting what the systems are saying, do with them what you will. And if you choose to do nothing and ignore it, or even do the opposite of what it is saying, that's fine by me too.
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1 year ago