TVO Market Barometer 8/10/15

TVO MB 8-10-15b

The bulls took a stand today, as far as volume goes, and knocked our Heat Gauge all the way down to a chilly -11 (which is pretty cold even for late summer here in New England). Only thing, though, is there just weren’t that many bulls in the stampede, as overall volume fell a hefty -9%, leaving us just a hair shy of generating a short signal. The short side of HG occurs more seldom than the long side (about 1/5 of the time), and has shown to be most profitable during bear market cycles, particularly in ’02 and ’08. In the current environment it would be tempting to just buy some puts, but we’ve learned to trust the system (sometimes it’s okay not to trade) and just take this message of low volume as a warning shot across the bow. Until the big institutions start opening the floodgates, staying in cash may be the place to be for now. -MD

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