Commentary | Moon Run


Bryan Johnson
Moon Run Report, LLC

This is commentary when the, Tsunami Indicator or the Long Term S&P Timer trigger signals, or a Shortable Correction is started.


Tonight there was a sell signal generated by the Short to Intermediate Market Timer.

To determine the Tsunami status, let's look at the qualifications:

1) The number of Nasdaq New Lows at the sell signal was 151, exceeding the threshold of 60.

2) The Rate of Decline indicator was 109.10, not exceeding the threshold of 190.

3) The Market Strength Indicator was 4.894 at the peak on 6/23/2015, above the threshold of 4.5, too high for a Tsunami.

4) The Market Strength Indicator was 3.906 at the sell signal on 6/29/2015, above the threshold of 3.8, too high for a Tsunami.

5) The Accelerating New Lows percentage is 61.50%, below the threshold of 80% to qualify for a sharp selloff.

6) The number of Nasdaq New Lows was 36 at the peak, not above 50 for a Tsunami signal.  However, since it is above 30, this qualifies for a Hedging position.
The average gain of a successful hedge is about 5.39%.  Since the market has already sold off 3.66%, this would mean a 9% correction or more is in the works.
This is a recent study with 10 previous successes identified and 3 not successful tries.  I am standing aside for this.  THIS IS NOT A RECOMMENDATION, but is of interest for future use.  
I will be keeping a record of this in the website.

So the Tsunami Indicator is not activated and a correction is in progress.  None of the portfolios will be retired at this time.


Portfolio changes will be emailed on Monday morning.

QQQ is bullish as of Thursday close.

Number of Nasdaq New Lows is 41.
Market Strength Indicator is 3.982, in bullish territory.
Long Term Market Strength Indicator is 3.929, in "volatile" investing environment.
Last market timing signal: Minor sell signal.

The market gave me conflicting signals, as an All Clear appears as well as the Long Term S&P Timer going from long to cash.
I view this as a "neutral" stance on the market.  I remain invested in the remaining portfolios and waiting for more clarity in market direction.


Tonight the Short to Intermediate Market Timer went to a bullish position, so I will be updating the website accordingly. Tomorrow morning the Conservative, Prudent, Aggressive and Timing Portfolios will be initiated once I get the picks from Portfolio 123.


Stand aside and wait for the next buy signal

With the market in crash type behavior, I am not at all in favor of buying stocks on the way down to the bottom. Why buy a stock at $100 when in a few weeks you can buy it at $50? The problems with this market are not being addressed and we can only watch it fall with no support level in sight.

The S&P 500 has already broken below its 200 day moving average line and also the support level of trading during the year. The Tsunami Indicator has done its job and I sold everthing last Thursday morning in my accounts and my mother's accounts barring ETF's that gave signals on the front page. I see no reason to hang onto the EEM or IYR, even though they have not given sell signals. My ETF timers are not reacting fast enough to this market. I will be looking at the timers this weekend to see what I can do to fix them.

Earlier this year the Tsunami Indicator flashed, but no sudden downdraft occurred. So this time around it has done its job. This "Twice a year" happening happened in 2002 and also 1987. In both years there was a false signal before the market fell apart on the next signal.

I do not like going short, but those who did congratulations. In 2008 I went short twice after the Tsunami Indicator flashed and came out both times because the market and the stocks went against me. There is the case for buying inverse funds, and you can make a decision about them yourselves. This time I remain in cash.

I will be buying stocks once I receive a buy signal. Don't expect it to be within 20 trading days from now. The allure of buying at the exact bottom and selling at the exact top detracts investors from addressing the real problem, which is how to do realistic portfolio management involving stock selection and market timing.


Tsunami Revisited

Regardless of the outcome of the decision on Washington or whether there is or is not a selloff on Wall Street, I feel that coming out of the market is timely. I get to replace the Conservative Portfolio and also begin the Aggressive Portfolio again. On every sell signal, the Timing Portfolio is sold and the ETF Portfolio had a marginal gain.

There is logic to the bears and also the bulls. Too much bad news can actually be bullish, but the overriding factor here is the status of the Nasdaq Summation Index. There is no change in in its bearishness since Wednesday, as it keeps on falling beneath the 12 day moving average line.

To review, the Tsunami Indicator is triggered when the market stalls out and the internals start falling apart. So we look for a sideways to down movement on the IWM and look at the Nasdaq New Lows for the reading for the status of the internals. When the Nasdaq New Lows is 50 or higher (this time it was 88), this is the confirming signal for the Tsunami Indicator.
Tsunami Indicator flashes
Today the IWM fell 2.98%, the Short to Intermediate Indicator gave a sell signal and the Tsunami Indicator has flashed a sell everything signal.
I am keeping all the other timers intact until they show a sell signal.
The Tsunami Indicator does not occur very often.  The signal given on March 10, 2011 saw a decline then a rally into April of that year.  The weakness in the market today may be because of political infighting, but nevertheless Wall Street has voted today.  I am terminating all the portfolios in the Stock Picks page and making indications in the Track Record page for the Long Term timer and the Short to Intermediate Term Timer.
Also at this time the Nasdaq Summation Index has crossed below the 12 day exponential moving average line.  This can be key, as market reversals many times occur when this happens.