Another Cloud on the Market Horizon

Jan.12.11 | About: Pax MSCI (NASI)

As the market continue to buy the dips I’m seeing another reason to become defensive. Let’s recap the major warning signs:

  • Extreme bullish sentiment
  • McClellan Oscillator has turned negative (last week)
  • Nasdaq Summation Index turned negative on 3 line break chart Tuesday. (01.11)

Click chart to enlarge

My market timing system remains bullish so it’s OK to play longs; in fact, I entered OpenTable (NASDAQ:OPEN), NV Energy (NYSE:NVE), and Zagg (NASDAQ:ZAGG) Tuesday. Here is a screenshot of my main watch-list that I’ll be choosing stocks to buy Wednesday. The key is to be nimble and proactive in managing your positions. All these new year predictions that ’11 is going to be another banner year has “trap” written all over it.

Click for video.