Please ensure Javascript is enabled for purposes of website accessibility
Growth Investor
Helping Investors Build Wealth Since 1970

Cabot Market Timing Indicators

The recent pop higher is very encouraging. We’ll be watching closely for any buy signals, but right now, our three key indicators remain negative, so we’re continuing to advise a defensive stance.

Cabot Trend Lines: Bearish


Our Cabot Trend Lines continue to tell us that the market’s longerterm trend remains clearly down—last week, the S&P 500 and Nasdaq closed below their 35-week moving averages by 7.6% and 11.3% (respectively). Having stretched so far to the downside, the recent market bounce could easily continue for a bit, but until we see both indexes surge above their 35-week lines, the major trend will remain down.

Cabot Tides: Bearish


Our Cabot Tides remain negative, though we’ll be interested to see how any rally develops in the days ahead. Some indexes, like the S&P 400 MidCap (shown here), hit a near-term double bottom last week and has now rallied back above its lower (25-day) moving average. For a buy signal, we’d probably need to see this index back above 1,320 during the next week or two. Right now, though, the intermediate-term trend remains down, arguing for a defensive stance.

Two-Second Indicator: Unhealthy


Our Two-Second Indicator recorded 1,395 new lows on the NYSE on January 20, and during last Thursday’s retest of the lows, we saw a positive divergence with “only” 710 new lows. That’s a good first step, but so far, just a first step—from here, we need to see the number of new lows drop to fewer than 40 for six or seven days to conclude the broad market has returned to health. The action is encouraging, but until proven otherwise, the broad market remains unhealthy.