Wednesday, September 7, 2016

IPM Model Review

Market remains in an uptrend. One should not reduce exposure to stocks at this time. This is a new up move and could yield significant gains.

We mentioned in mid August that Inflection Point Model is predicting a August 30 (+/- 4 days) turn window.

Market leading into the turn window went sideways for almost a month and then declined. So far it seems like that the turn window has resulted in a market bottom. The bottom was made on 9/1 at SP500: 2157. Since that bottom, market has rallied ~30 points in few days.

Alongside IPM, there are several other reasons to support market bottom hypothesis:

  1. Market Structure
  2. Technical buy signals
  3. Proprietary trend indicators

Market Structure:

Following chart shows the sideways market action. However, the interesting part is that this sideways action has traced out a corrective 3-wave Elliott Wave pattern, ending with an ending diagonal pattern. Once this patter was completed, it suggested that we can see some sharp gains.

Technical Buy Signals

Market generated technical buy signals towards the end of August

Proprietary Trend Indicators:

Prop trend indicators (Market Classification Model) have been signalling that the stock market is in an uptrend. And in uptrend, market consolidations/corrections typically correct to the upside. If they don't, the trend reverses and Market Classification Model will pick it up. MCM defines bull and bear markets and can help any investor stay on the right side of the market.

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