Category Archives: NLO Market Score

NLO Market Indicator–June 18, 2024

Posted on June 19, 2024 by | 1 comment

Our readers recently inquired about an update to our Market Score and Dow Theory Indicator. Continue reading →

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NLO Market Indicator Revisit

Posted on January 1, 2024 by | Leave a comment

We received a question from our member and wanted to revisit our market indicator:

Hi New Low – I have a question about the market indicators — right now, the buy is showing -5, and the sell is showing -1…. I’m not sure what this means because you say when the sell is -1, that’s a bearish indicator and a time to preserve cash, but the buy is showing quite bullish at -5 (given you say it’s a time to be bullish at -6).

The market indicator is our proprietary model that combines various data into a single model with the intention of identifying inflection points in the market. Continue reading →

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NLO Market Indicator–November 10, 2022

Posted on November 10, 2022 by | 6 comments

The market had one of the largest daily gain since 2020 today with the S&P rising 5.5% and the Nasdaq jumping 7.3%. Such action pushed S&P 500 above the most recent high of 3,900 in late October. Below is the current view of our Dow Theory Indicator and NLO Market Score ®. Continue reading →

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NLO Market Indicator–September 16, 2022

Posted on September 19, 2022 by | 2 comments

The market fell another 5.8% this past week and has lost over 9% in a month. Continue reading →

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NLO Market Indicator–June 14, 2022

Posted on June 14, 2022 by | Leave a comment

On Monday June 13, 2022, the market fell nearly 4% and triggered our Market Score down to –6. The last time we saw this was on March 12, 2020. Continue reading →

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NLO Market Indicator–May 11, 2022

Posted on May 11, 2022 by | Leave a comment

Since our update on 4/29/2022, the market continue to move downward and now reaching a yearly low. Our Market Score and Dow Theory Indicator turned negative on May 9, 2022. Continue reading →

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NLO Market Indicator–April 29, 2022

Posted on April 30, 2022 by | Leave a comment

The S&P 500 lost -9% in the month of April and many indicators are pointing to a bearish market. Our Dow Theory Indicator (red line) has not turned negative yet. However, all major indexes are approaching their yearly low (see second chart below) and surely will trigger our indicator to move into negative territory of –1 and give us a sell signal.

Although an official sell signal hasn’t been triggered by this indicator, our read on the market breadth has been negative since the Market Score (green line) went into negative territory on February 1st. At the time, the S&P 500 was at 4,547 which is 10% higher than current level.

A buy signal occurs when market capitulates to the downside. A mark of –5 indicate a market capitulation to the downside and triggers a buy signal. Continue reading →

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Market Update–April 15, 2022

Posted on April 16, 2022 by | Leave a comment

Market remain on shaky ground after giving back 1.8% this week. Year-to-date, S&P 500 lost 8.4% and the Dow fell 5.8%. All major indexes are now trading less that 10% from the low (see first chart). Our Market Score (second chart) rebounded back to 0 and we continue to see this as bearish to neutral. A reading of –5 or lower would mark a buying opportunity with tremendous upside and limited downside. Continue reading →

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Market Update – March 8, 2022

Posted on March 8, 2022 by | Leave a comment

Below is the market update as of March 8, 2022. Continue reading →

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Market Update – March 4, 2022

Posted on March 4, 2022 by | Leave a comment

There are no surprises that we all major indexes are declining. One of the factor we monitor is the market internal which look at the % from the one-year low. The chart below display the weakness which started when the Russell (RUT) broke below one-year low on 1/19/2022.

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Our team will provide an update on the market based on Dow Theory this weekend.

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NLO Market Indicator–June 4, 2021

Posted on June 5, 2021 by | Leave a comment

Major indexes rallied to end to week a little closer to their all-time high. Both the Dow Industrial and S&P 500 are a fraction of percentage away from reclaiming the peak. However, we are seeing concerning sign from our NLO Market Indicator. We explore the current environment and revisit the financial crisis and dot-com bubble to see the similarities. Continue reading →

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NLO Market Indicator–May 14, 2021

Posted on May 17, 2021 by | Leave a comment

It was a volatile week for the market. Despite 3 major indexes (S&P 500, DJI, JIT) reaching all-time high and confirming Dow Theory bull market. There are some sign to keep a look out for. Below is the market indicator at the end of last week. Continue reading →

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NLO Market Indicator–Dow Theory Indicator March 2021

Posted on April 2, 2021 by | 3 comments

It was a strong month for the market with S&P 500 gaining 1.8% while the Dow Jones Industrial topping 4.6%. However, we are seeing some weakness in the small cap area as the Russell 2000 was down about 2% for the month. It’s becoming more apparent now that a switch to value from growth is occurring as DJI have out performed RUT since early February. DJI rose 6% while the RUT lost 0.6%. One can revisit our assessment of Market Ratio here.

That being said, our NLO market indicator have not show any sign of weakness. Most major indexes made all-time high in March. That wasn’t the case for Nasdaq and Dow Jones Utility. Below is a view of where we are at the end of March. Continue reading →

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NLO Market Indicator – Dow Theory Indicator February 2021

Posted on February 24, 2021 by | Leave a comment

The market's recent run-up coupled with volatility may cause some concern for market participants. As recent as last Monday, February 12th, we received a confirmation of the rising trend based on Dow Theory. Both the Dow Jones Industrial Average and Dow Jones Transportation Average closed at their all-time high.

To that point, we want to discuss a proprietary market indicator which shows the state of the market. We will reveal the details of the indicator but the essential components are the Industrials and Transports which provide us with the longest history of data to back-test.

The chart below shows the S&P 500 in blue plotted against the indicator which we will call Dow Theory Indicator. The one million dollar question is how do we know when a substantial market correction is coming. This isn’t an exact science but this is our best attempt. Typically, we see that the market (S&P 500) fails to break above the high and Dow Theory Indicator drops into negative territory. Continue reading →

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Posted in Dow Theory, Dow Theory Confirmation, NLO Market Indicator, NLO Market Score

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NLO Market Score – Our Proprietary Market Timing Tool

Posted on December 11, 2020 by | Leave a comment

The concept of a market indicator or market timing tool isn't a new concept. While compounding is THE most power force in investing, market timing tools come in a close second. As the old saying, "don't tell me what to buy, tell me when to buy".

Our team has developed a proprietary market timing tool which we are calling NLO Market Score. In its simplest form, the tool assigns a score ranging from -6 to +6 to the market and is similar to market breath.

For example, the market score reached -6 on March 12, 2020 when the S&P 500 was at 2,481. Since then, the market have risen nearly +50% in less than a year.

However, the 2008 bear market pushed the score to -6 early in October thus leaving little upside if you did a one time purchase. No single (or multiple) market indicator will be accurate enough to call market bottom and that goes for ours as well. That being said, we've back tested the indicator with a reasonable success rate which we define as any positive return.

Below, in table A, we have summarize the outcome of purchasing the S&P 500 when market score reaches -6. In table B, we show the details of the trade/transaction.

Table A:

Table B:

A close observation and you will notice that there are purchase dates within days of each other. To adjust for that, we have taken only the first indication that occurs within that year. The result are summarized in tables C and D.

Table C

Table D

As a long-term holder of equities, we are pleased with an extreme high success rate coupled with above average (>10%) annualized return.

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