We post commentaries on the MTR-TM from time to time when it appears the MTR-TM is close to a trend change. Today the MTR-TM was down -7.31% week over week.  The back tested criteria was very close to issuing a Market Down signal today. It was missed by a very small fraction.

As discussed in a previous post positions in index related ETFs would have been stopped out. We are on the sidelines right now in most positions other than commodity based ETFs (Gold, Oil, and Grains).

When the MTR-TM peaked at +2 standard deviations on the Z-Score indicator we started buying Gold ETFs to hedge our oil related positions. We typically buy puts at +2 on the Z-Score indicator but this time around we did not take any action. We have noticed that the last week of the month (option expiration) typically trends down and we were looking at late next week for a deep pullback but it may happen sooner.

If you notice Bollinger Bands and Z-Score is right at the +1 standard deviation. This is a level of resistance.  Arron is close to crossing down 70 which is a key point in the Arron indicator for a trend change.

Volume has been low to flat while the market has been trending down. This shows that traders are holding on and could mean either a short down trend or some sideways movement. In either case if a sell signal fires we follow the trend keeping our customary 4-5% stop. Traders that are fans of Investors Business Daily would apply an 8% stop on all trades.  The stop loss rule can be called the PPC rule. This acronym was made popular by Marcel Link, the author of High Probability Trading. PPC stands for "Preserve Precious Capital. "