Seeking Alpha

Erik McCurdy's  Instablog

Erik McCurdy
Send Message
Erik is the senior market technician for Prometheus Market Insight and has been performing chart analysis since 1995. The software program that he developed to monitor long-term stock market trends has correctly identified 92% of the cyclical turning points in the S&P 500 index since 1940.... More
My company:
Prometheus Market Insight
My blog:
Prometheus Market Insight
  • Sentiment Score Moves Further Into Sell Territory 1 comment
    Feb 7, 2013 3:48 PM | about stocks: SPY, DIA, QQQ

    Our Cyclical Trend Score (NYSE:CTS) searches for likely cyclical inflection points in the stock market through the analysis of a large basket of fundamental, technical, internal and sentiment data. As we noted last week, the sentiment component of the CTS has moved into sell territory, indicating that the current rally has become vulnerable to the development of a potentially violent overbought correction. This week, the sentiment score has moved further into sell territory, declining to the lowest level since 2011.

     

     

    (click to enlarge)

    Every time the sentiment score has declined into the red area on the chart above, a violent correction has followed. This type of market behavior is typical during late-stage cyclical bull markets that occur during secular bear markets. Earlier this week, our computer models indicated that stock market investment risk had increased to the highest level during the last 84 years, urging extreme caution from a long-term perspective. However, the sentiment score move into sell territory suggests that short-term risk is also very high. Therefore, traders should remain prepared for the likely development of a meaningful retracement sometime during the next several weeks.

    We will identify the key developments as they occur in our daily market forecasts and signal notifications available to subscribers. Try our service for free.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Themes: Market Outlook Stocks: SPY, DIA, QQQ
Back To Erik McCurdy's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (1)
Track new comments
  • Michael Clark
    , contributor
    Comments (8362) | Send Message
     
    NIce report, Erik.
    8 Feb 2013, 04:45 AM Reply Like
Full index of posts »
Latest Followers

StockTalks

More »

Latest Comments


Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.