In my previous email I said "after a strong run the FTSE is vulnerable to a set back. Markets move in waves with predictable patterns. The current pattern is ending and our timing indicators suggest that the FTSE will pull back".
Today the FTSE is pulling back. Is it the beginning of a long term decline or simply a correction in the uptrend? It does not really matter except if you are a short term trader. We trade the short term trend, so the current decline provides us with an opportunity to take profits, we are not prepared to stay short because the FTSE may rally again.
But how did I know the decline was coming? Using eYield FTSE Timing Indicator, investors can anticipate a decline with a high degree of certainty, see chart.
When the indicator gives a sell signal the probability of a decline is 80% but this does not mean the decline will start immediately. The last sell signal was on 4 January, as you can see on the chart sometimes the market will continue to rise for a few days. I must warn you that the period July-August last year was not the best time to judge the indicator as the FTSE kept rallying.
When the indicator gives a sell signal the probability of a decline is 80% but this does not mean the decline will start immediately. The last sell signal was on 4 January, as you can see on the chart sometimes the market will continue to rise for a few days. I must warn you that the period July-August last year was not the best time to judge the indicator as the FTSE kept rallying.
In general markets do not move in a straight line, they tend to move up and down or sideways. This is when the indicator performs best.
To learn more go to www.eyield.co.uk
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