Bill Rempel, a.k.a. NO DooDahs!

3 Comments on “Thirty-One Charts”

1. Tom K
   May 16th, 2008 at 1:28 pm

   Hi Bill,

   I take it you’re bullish? My timing model continues to deteriorate. If the 5 day moving average of the Value Line Composite can’t break above it’s 200 day moving average by the close today, my timing model will fall to -.5 (40% long). Two sentiment models are now signaling excessive optimism: Goefert’s smart dumb/money model and the intermediate model. The intermediate model is also at it’s highest level since late 2006. Obviously that doesn’t mean we can’t go higher, but the 2 U.S. indices used in my model need to push through their 200 day moving averages to turn my model around.

2. Bill
   May 16th, 2008 at 5:59 pm

   From a discretionary standpoint, on the S&P 500, it depends on the timeframe, as there will most likely be either a better long entry than now before too long, or a short-timer’s shorting opportunity soon. The 2-day RSI in the very first chart on page one is high, as is the number of stocks in the S&P 500 above their 50-day average on the sixth chart on page two. It will probably take days or weeks to work off those conditions. I view most of the longer term charts as constructive.

   From a systems standpoint, the Timing model changed from 50% SPY and 50% cash on January 18, 2008, to the current 25% SPY, 25% IEF, and 50% cash configuration. It moves very slowly, and any index action above the 100 ema is constructive, but the low VIX relative to actual volatility will probably keep it from fully commiting until there is some scary downside action, which may not come for months. My VIX component is sentiment-driven and is the reason the model is 50% cash. It might be June before the Timing system commits to 50% SPY and it might be still later in the year before it gets 100% long. The key thing to remember, Tom, is that our timing systems may well disagree about THIS instance, and still both be very good, reliable systems in the aggregate.

   The other three systems are pretty much 100% long 100% of the time. It’s not THAT they’re long, it’s about WHAT they’re long.

   Apologizing for the length of the response, but I am trying to be careful in differentiating my opinions based on all the data I’m seeing, from the mechanistic determinations of my systems. Just because I’ve viewing data that my systems don’t include doesn’t mean that’s a good thing! Also, I’m usually trading a system and not trading my opinions, although I reserve the right to deviate when I feel it’s appropriate, and I think most potential readers prefer to have some color commentary in addition to the system output.

3. Tom K
   May 16th, 2008 at 11:14 pm

   Thanks for your explanation. Actually our models are giving similar messages. Mine might be a bit more hyperactive though.

   It seems as though we’re at a very important juncture. My model is poised to move quickly in either direction…depending on what prices do. If the SPX can push through it’s 200 dma next week, my long allocation will pop. However, if the market backs off enough to force the Value Line back below it’s 200 dma, my model could go to very light long exposures.

   I’m really concerned about the sentiment indicators I’m watching.

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