Wednesday, 19 September 2007

U.S. Equity Indicator Falls to 0.43, Still Bullish

I've just updated my table for my U.S. Composite Equity Indicator based on the Commitments of Traders reports. As of last Friday's COTs release, the indicator has fallen a little to 0.43 from last week's 0.66. (See the "Latest Signals" link in the Navigation bar.)

A "1" reading means all four of the equity trading setups that make up this indicator have just flashed a bullish signal, for execution on the next weekly open of trading.

Despite the slippage for this indicator, it still remains on a bullish signal first given with the March 27, 2007, COTs report. It is also still far from the "-1" reading that would indicate a bearish signal across the board.

If the huge ongoing market rally is any sign, the Composite Equity Indicator's bullish signal seems to confirm that the summer's nastiness was a relatively minor correction within the five-year bull run. No warnings from the COTs data that the bull market is over, despite the doomsday notions of some analysts out there. At least not yet.

Note, however, that at the worst of the summer's market rout, this indicator fell to 0.40, which isn't too far below where it stands right now. So that may be a warning sign of a little volatility ahead.

My composite indicator is based on four of my equity trading setups built around this government data. For more details see the main table at the "Latest Signals" link.

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