With earnings season well underway, the market trend has been rising, however, we should be aware that a pause or even a pullback would not be unusual when the MTI is at the current elevated levels in both CA and US markets. Historically we know the market is nearing a top or searching for a top when the MTI is between 1.20 and 1.30 in Canada (CA) and 1.50 and 1.60 in the US.
So while we still want to follow the guidance in the VectorVest Views which is currently bullish, it may be a good idea to be nimble when buying any new positions and have defensive stops in place on stocks that you own. When the MTI is this elevated, your priority should be to protect against losses and avoid giving back too much of any gains.
Playing defense in this way also helps you raise cash to take full advantage of the next bottom which Dr. DiLiddo calls the ‘blast off phase’. Historically this occurs when the MTI is around .60 or below in both CA and US. (See CA Blog post re 5-Steps to Profitable Bottom Fishing http://www.vectorvest.fr/get-ready-bottom-fish-heed-dr-diliddos-bear-market-warning/)