Well predicted urgly week

The S&P 500 Index dropped 3.6% in the week of November 9 - 13. Well, this selloff is well expected and predicted by our models.

The pairs trading model suggested to short NDX and long INDU on October 30, which implied that the equity market was likely to drop in the near future.

The index timing model showed a sell signal on Novermber 5. Even though there was a short-live buy signal before the market close of Novermber 11, a strong sell signal followed the market open on Novermber 12.

When both models point to the same direction, the market is very hard not to follow the trend.