The SSRatio dropped enough Wednesday to signal "lite mode" falling 0.39 to +0.04 favoring Selling, the estimate of market risk rises to High. The market internals have decayed almost every day since the June 6 ratio peak of 2.23. This gave us another 16 positive days, which followed a 23 day run, the two runs interrupted by a 3 day pause. Theoretically, with this signal, one would sell at the open tomorrow, but the 16 trading day run, from the open May 28 to the close today, the NASDAQ rose 7.5% and the NYSE rose 6.7%. Both would be wonderful return when compared to a year of other investments, and the gains we've seen in stocks we alerted have easily beat those gains.
My feeling is that we are seeing a correction in a bullish market phase, if so, the SSRatio won't be negative for very many days. But in the meantime, I'll be cautious and will tighten the stops of the positions I'm holding, and add new positions with 1/2 or less of more normal position size.
Sam
