Some quick technical thoughts on QQQ and the market to open 2016...

...after peeking at the charts just now:

  1. Current long-term allocations for the Sea Change Core Equity Model remain at 16.66% long of QQQ (or large cap US stock mutual funds / annuity sub-accounts) and 84% cash. Nothing close to joining QQQ above trip wires.
  2. No TRIN buy signal yet, but it is now primed. We need two consecutive days where our proprietary TRIN-based indicator is above 1.20 and then we'll be waiting for it to turn lower. Thus far, we have 1 day of above 1.20 (Friday). When TRIN signal flashes "buy", it's "all-in" long of stocks via QQQ, index funds or variable annuity sub-accounts. These signals only occur a few times per year. When they have gone off historically, though, they have been correct far more often than incorrect.
  3. No long-term weekly oversold readings yet. Nothing really close to doing that except EEM. But, even that is a ways away.
  4. From simply a chart-reading perspective, the action on Friday was BAD. The NASDAQ 100 futures closed below their short-term "correction support" - which opens up more downside potential in the short-term. Since the NASDAQ has been the most bullish technically, this is not a great sign for the bulls.
  5. Bonds with any duration at all do NOT seem like a great place to hide technically. Based on a look at the chart of TY futures, prices appear to be set to move lower. So, just park uninvested monies in cash or extremely short-term / low-duration bond funds and NOT in longer-duration / long-term bonds for the time being. If you have access, use money market funds. If not, shoot me a menu of your choices and I'll advise.

Overall, this looks like the equity markets could sell-off to open 2016, possibly taking prices to extreme oversold levels and almost certainly triggering one of our TRIN "buy" signals. So, our current position of only 16% exposed to equity market risk seems wise as well as timely - given the likelihood of an extraordinary short-term buying opportunity approaching soon.

Posted to Peak Analytics' Direction... on Jan 03, 2016 — 4:01 PM

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