Sunday, June 17, 2012

IPM Model Update

IPM Turn window: July 6, 2012 (+/- 4 days)
MFI Turn date: June 29, 2012 or July 3, 2012

Therefore, market could rally till the end of the month (next 2 weeks). It makes so much sense, when one sees the time analysis from the perspective of economic uncertainty relating to Greek elections and negative market sentiment among Newsletter writers. This rally will be sharp and will bring back much optimism into the market.

Please note that market might top, as Q2 earnings start in July!!

Update June 20, 2012
Currently, VIX is undergoing a sell signal setup. Although this signal is very important because it conforms to the overall downtrend thesis, it forces us to think that how can the market continue higher for the 7-10 days.

Few reasons for possible rally continuation are:
1- Overall bearishness among the newsletter writers has to be worked off
2- VIX sell signals result in market declines after 5-7 days.

In short, this will be an interesting test for the market. One scenario might be that we go up in a choppy sideways (diagnol) pattern, which could take a few days to carve out but will also give the impression that the market is still rising. Lets see what happens....


  1. Thanks Naqvi.

  2. Thanks Naqvi, I've been away for a while, but I'm loading up this morning (from 100% treasuries to 70% equities, 30% treasuries). Thanks, Brad

  3. Please be advised that this rally will most likely fail and the market could put in a top by early july. We have not seen an 8 4 test completion to the upside, which means we still remain in a downtrend. Therefore it is not a time to buy for the long term. One strategy might be to scale in if one really wants to manage risk and ensure that probable july top will not hurt.

  4. I agree. I believe we are on the same page, but I can't really scale in (as in making a couple of purchases to get to 70% equities). My 401k plan only allows so many trades a months (3), so I have to make bold moves sometimes to get any retruns from the market, I think this is a good time. I only do this a couple of times a year. Trust me, I'm only in for a couple of days and no longer than late June - then I'm back out (this is not a long-term trade for me), and that would be trade no. 2 for my plan. My trade out will take me back into treasuries (treasuries is as close to cash I can get).

    I fully agree that July will experience a pull back and could get ugly - and I have no intention of being in the market unless I see/hear something different, but at this snap shot in time, I'm in for a couple of days, maybe a week, then I'll be out. Thanks Naqvi! Brad


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