TVO Market Barometer 10/19/16

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Wednesday’s bump added yet another day of accumulation on SPY (Tuesday’s accumulation was across the board), setting the stage for the reversal to continue. The bulls may want to curb their enthusiasm, though, as TVO is still well below zero with plenty of distribution in early October to show for it. October surprise coming? The market will always do what you least expect and never what you want… at least never when you want it to.

After buying last week’s dip, we exited our SPY calls for an average gain of +3%. Shrinking volatility could’ve easily turned it into a loss, but IO (our Issues Oscillator) offered us a second buy signal which averaged down our position, keeping the trade on the positive side (Yes winners do average losers). Another day of solid buying could keep the market fueled to go higher short-term, but then the only surprise we’d get (is it really still a surprise?) may be the inevitable shakeout, which could be a big one… it is October after all. -MD

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