Replies to post #34463 on Profunds index and sector trading (PRO)

[was Steve]

<Any thoughts from the board?

take two short positions and call me in a few months (gg)

[CaribbeanJim]

Vestor - Good work. I think you may have something there. I also watch the SP500 BPI on occasion. I track its movement with the PSAR and what I am noticing is the PSAR dots have a VERY TIGHT configuration off the June bottom. That tight dot configuration off what is presumed to be a major bottom typically means the move is a bear flag in disguise. This will be interesting to look back at the end of the year to see if was indeed the case.

[Gizmo]

Now that is an excellent observation.

[tarm]

Vestor_2000: Good observations. I will just add my opinion.

1. Draw a bigger chart (i.e. 10 Yr) for BPSPX. You will see, that once BPSPX starts going up, it keeps going up for a while, whether slow or fast. The speed of BPSPX also does not corelate to speed of SPX. The direction of BPSPX has more co-relation to SPX. Also notice that this time, BPSPX is going up after sort of a double bottom. IMHO BPSPX is pointing out even more of up than down in near future. Though this conflicts with Steves roadmap. I have more faith in Steves roadmap than BPSPX and his past performance proves it.

2. COTS: COT is good explaination of what happened in markets, rather than the good indicator of future direction. Look at May second week number, you will see commercial suddenly increased their short position. Also the August rally concides with short covering of commercial. IMHO, the markets go up or down based one what commercial do i.e cover shorts or sell short respectively. It is immaterial if they are short or long, it all depends on what they do with their position.

Any way I do not go long or short based on any of the opnions expressed above. I go by day to day decision based on my mechanical signals.