Saturday, February 6, 2016

Selling Very Likely Continues

SGS Market Timer Status:  SHORT 
Short as of close of 12/11/2015
Current Portfolio (2016)
Updated for recent trades
Past Portfolios (2008-2015)

Long Term Outlook (Weeks to Months):

An ominous Head and Shoulders Top (H&S Top) has formed on the weekly chart of SPX, shown above.  The neckline for that H&S Top has been breached now and SPX is very likely on its way to upper 1500 (1574) to reach the objective level for that price formation. To get there, SPX would have to drop an additional 16% from its close (1880.05) on Friday. 

Chances are good that SPX drops to upper 1500's by late March to early April.  At that point, the Fed would very likely intervene by lowering interest rates (0.25%) and going back to ZIRP.  It's doubtful if the Fed can shore up indices and prevent a recession by ZIRP alone.  Eventually, the Fed would be forced to start another round of QE sometime early summer.

It's either starting a new round of QE to prevent a recession or having a narcissist in the White House in January of 2017.  I would choose QE.

Short Term Outlook (Days to  to Weeks):

Shorter term, after a "dead cat" bounce early this coming week, SPX very likely sells off to test its TUL around 1830.

MY Plan:

Per my plan I did my first of 3 shorts in SPY and QQQ on Thursday at the open.  I'm planning to do my second short sell sometime early next week, very likely on Monday.


SPX: S&P 500 Index    D-SMA: Daily - Simple Moving Average
DJI: Dow Jones Industrial Index    D-EMA: Daily - Exponential Moving Average
DJT: Dow Jones Transportation Index    PDL: Primary Downtrend Line
NAZ: NASDAQ Composite Index    PUL: Primary Uptrend Line
RUT: Russell 2000 Index    ADL: Active Downtrend Line
OEX: S&P 100 Index    AUL: Active Uptrend Line
NDX: Nasdaq 100 Index    DTL: Dynamic Trend Line   
TUL: Tentative Uptrend Line   TDL: Tentative Downtrend Line  

Disclaimer: The views expressed are provided for information purposes only and should not be construed in any way as investment advice or recommendation.  Furthermore, the opinions expressed may change without notice.