The ‘Man in the Middle’ Loses Blue Sky

I am on record as leaning toward a seasonal rally (with the FOMC wild card stuck right in the middle of the deck), but it has been elusive as we enter the heart of Santa season. Meanwhile, NFTRH tracks key market and economic internals each week and color codes them Bullish | Neutral | Bearish. It’s probably no surprise that more and more have been going from green and blue to red.

One such indicator that has worked its way from green to blue to red is the MiM, AKA the man in the middle, AKA the median stock out of a constellation of about 1700 of them.

When XVG broke to blue sky in 2017 it had to be respected as a bullish market participation and breadth indicator. So now that it has failed (barring a miraculous rally and December close above broken support) should we not respect it for the opposite reason? Yes we should.

No single indicator is the secret sauce and that is why I use many. Their messages, when combined in a simple form like the green, blue and red coding above, are what keep us on top of probabilities. Personally, I’d never use a robo adviser or algo. I have my own two eyes and this admittedly all-too human information processor between my ears.

My eyes tell me that XVG is currently not in blue sky.

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