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PITBULL INVESTOR©
MARKET UPDATE & COMMENTARY For
Tomorrow, SEPTEMBER 1,1998 by Henry Ford
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WE ARE CURRENTLY UNDER A -10 PCI PITBULL
CRASH SIGNAL WARNING ISSUED 7/24-SEE COMMENTARY
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*MARKET UPDATE COMMENTARY*
LONG TERM,(3-6 months)BULLISH, INTERMEDIATE,(1-3 months)NEUTRAL,...SHORT TERM(1-7
days)Neutral
Tonight, millions of investors are going to go home, flip on their TVs and try to
decide whether they really are "long term, buy and hold" investors or whether
they are going to call their brokers and tell them to get them out first thing tomorrow
morning. If they were holding "Big Board" NYSE stocks they are now at that
moment of truth. Just a fraction away from a 20% loss in just 32 trading days that
has wiped out all of the years gains and more.
As we've been saying, the thing that has been missing in all of this market activity
of the last week is a definitive bottom. Ideally what we would like to see is an
early selloff by worried investors with a market that then recovers to near or above
the open. This is typical recovery from the climactic selling days we've seen for
the last week, but we've never gotten the recovery. Support after support has been
taken out without a seeming respite in sight. The recent pattern that has established
itself is a strong rally in the early going and then a complete collapse for the
rest of the day with no redemption at the end of the trading day. We saw another
selloff of the SP500 futures at the end of the day after the market closed indicating
that we will probably see a lower open or a retest of the lows tomorrow. I keep looking
for the light at the end of the tunnel. It looked like it was there Friday, but traders
were just not able to control the market this morning.
Tomorrow is a key day for us in many respects. It will be the fifth day in a row
downward for the NYSE if it closes lower and that would give our 2nd -10 reading
on the PCI. In addition, we are now near some very critical levels that if crossed
would tell us that this is more than a correction in a Bull market which has been
our position.
Intermediate and longer term the picture won't clear until we see what form the reversal
of this market slide takes. It WILL reverse, the question is how much and what is
the next stage. Even market crashes have reversals, some remarkably strong. In a
bear market these are "sucker" rallys that bring money back in to restore
confidence, only to pull the rug out once again. In Bull markets, these corrections
provide fuel for resurgence and retracements on rallyies will only fall back about
50% of their gains. We need to see the next rally and the subsequent retracement
to be able to difinitively say one way or the other.
We were buyers today, but we did so cautiously, with specific price points and we
have already put our stops in place.
What are the odds of a bounce tomorrow? We compute it at 80/20, for the first time
we've been able to put a number to it. Can we be wrong? Absolutely ....Will a rally
last? Too early to tell, but if you were able to get into cash and you have a kitty
set aside and you aren't 19% down on your portfolio right now, this is a modest risk
entry on some great stock bargains of the century. If wrong and your stops are in
place your losses will be quick and small. If right and we get the bounce, we will
know beforehand where we are going to get out. We are now computing the turning points
for the next key market days of September and will have some specific timeframes
for you tomorrow night.
Aren't all you Mutual Fund subscribers glad you followed our lead and aren't "Buy
& Holders"?...Aren't you Pitbulls who followed our shorting list happy campers
right now?...We will use this market to our advantage, but only when the time is
right.
WHERE DO WE GO FROM HERE?
At this point caution is the byword.
Having been put on alert by the Pitbull Crash Index, (PCI), on the 24th of July,
we have excercised caution and utilised protective measures in this market ever since.
Tomorrow is a key day for us, because if the NYSE closes lower it will change BOTH
our short and long term view to bearish. If this does happen we will give an additional
update tomorrow evening. |
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questions or comments? Email us
at pbinvestor@gmail.com
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***INDICATORS***
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PITBULL CRASH INDEX:
- 8 BEARISH TODAY
Bear Alert -10 on 7/24
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ACTION OF 8/24 RESET THE PCI CLOCK, SO IT WILL TAKE 1 MORE DOWN DAY IN A ROW TO TRIGGER
ANOTHER -10 WHICH WE WOULD SEE AS VERY SERIOUS.
(UPDATED DAILY only for subscribers)
CLICK HERE! to
see what to do.
**VOLATILITY INDEX**One of the indicators I have talked about
is the VIX. This is another indicator from CBOE whose full name is Market Volatility
Index. This index, while it has no nice fixed number, (like >0 = oversold;<0
=overbought), can be best evaluated with the use of simple 20 period Bollinger bands.
When the VIX rises to meet or exceed the 20 day upper band, you can generally count
on a rally within the next two days....conversely, when the VIX drops near or through
the lower band, you can expect the market to reverse and fail within the next two
days....It doesn't ALWAYS work that way, but when used in conjunction with some other
simple indicators can give you a pretty good idea of market direction near term.
VOLATILITY INDEX (VIX) 48.33, above the 41.43 upper band,
(BULLISH) and way above the 22.18 lower band that would signify
a market collapse.)
Click Here for Yesterday's Chart
**Fair Value**(CLICK
HERE FOR FORMULA) For those who like to trade or watch
the S&P and use that as a guide for what's going to happen to the market near
term we look at three key computed numbers. FAIR VALUE is the S&P500 futures
premium that is closest to balanced...no bias bearish or bullish. The BUY TRIGGER
is that number which most large block trader's computers are set for that when hit
will trigger them to automatically start buying "market baskets" of stocks.
SELL TRIGGER is the reverse and causes to dumping of stocks.CNBC gives out their
own version in the morning, but it is not accurate enough for daytrading.
Whenyou hear them talk about buy programs "kicking in" this is what they
are referring to, and is the primary reason we see curb rules
go into effect.
TOMORROW'S BUY PROGRAM TRIGGER: 5.86 TOMORROW'S SELL PROGRAM
TRIGGER: -1.68
TOMORROW'S FAIR VALUE: 2.22
CBOE Put/Call Index:
A measure of the Public attitude, Bullish, neutral or Bearish,(a contrary indicator),
at a bullish 1.14 back above .85 which is the upper limit for this
sentiment indicator. This now is signalling a bearish public. Going above .85
puts us into a ready to rally mode. Going below .55 indicates a selloff due.
OEX Put/Call Index, A measure of Public Attitude as reflected by SP100 options
has now risen to ..97 . A crossing below 1.0 indicates an increasing chance
for a short term pullback.
McCLELLAN SUMMATION INDEX: Now dropping to a very bearish -3032. We
need to see this reverse again. Remember that this is a slow to turn indicator because
of the moving averages used to compute it..
Shorter term the McCLELLAN OSCILLATOR is at -290, dropped again,.
Click here for a recent chart and description...
SELECTED CHARTS TODAY:(UPDATED LATE EVENING).
SP500
SP100(OEX)
DOW
NASDAQ
NYSE
VIX(Volatility Index)
WANT TO WATCH THE MARKET REALTIME ALL DAY?....Click Here-Updated automatically every 60 seconds
You can now watch overseas markets on a real time basis before the market open so
that traders can watch for these effects at a new 60 second updated Overseas
Charts Page )
SHORTING THE MARKET?
We are normally short and long in our portfolio simultaneously by selling and taking
advantage of those stocks that evidence topping signs and buying those that are outperforming
the market.. Shorting profits were outstanding before 7/24 and since then have gone
through the roof. Don't you need some downside protection that works BOTH in Bear
AND Bull markets?
If you would like to learn how to identify these shorting candidates and learn how
easy it is to short stocks, give us a call at 1-800-491-9951 and ask about our 'Guide
to Shorting High Performance Stocks" or go to our website at http://www.pitbullinvestor.com |
