Sunday, October 28, 2018

Mid-Term Election Is Critical

SGS  Market Timer Status:  SHORT 
SHORT as of the close of Friday Oct 5, 2018
SGS is a Long-Term (weeks to months) Timer
Why Market Timing Is A Must

The upcoming mid-term election is critical. There is a good chance that Reps lose their majority in the House but if they also lose their majority in the Senate, indices would sell-off significantly and lose most of their gains since November 2016.  Recent events have certainly hurt Reps chances of retaining their control of the Congress.

The monthly chart of SPX is shown above.  As highlighted on the chart, in the last 25 years, SPX corrected significantly (15% or higher) when it had traded and closed below its Monthly Dynamic Trend Line (M-DTL, 13 M-EMA) for two consecutive months.  On Friday, SPX closed below its M-DTL (13 M-EMA) for the first time since January 2016.  If SPX continues to trade below its M-DTL and closes below it at the end of November, there would be a high probability that SPX sells-off substantially more to test support on its weekly chart around 2200.

SGS declined substantially last week, signaling that more selling is ahead.

Supports and resistances for SPX for the upcoming week are shown above.  Indices are oversold and chances are high that we see a rally on Monday and Tuesday this week. Those rallies would be good opportunities to open new short positions.

My Plan

I closed my SDS long positions on Friday.  My plan is to open new long SPXU positions sometime early this week as SPX resumes selling to test support at 2630 and beyond.

Current Long-Term Portfolio (2018)
Past Long-Term Portfolios (2008-2017)

SPX: S&P 500 Index    SMA: Simple Moving Average
DJI: Dow Jones Industrial Index    EMA: Exponential Moving Average
DJT: Dow Jones Transportation Index    PDL: Primary Downtrend Line
NAZ: NASDAQ Composite Index    PUL: Primary Uptrend Line
RUT: Russell 2000 Index    ASL: Active Support Line
OEX: S&P 100 Index    ARL: Active Resistance Line
NDX: NASDAQ 100 Index    DTL: Dynamic Trend Line   
TUL: Tentative Uptrend Line   TDL: Tentative Downtrend Line
TLR: Trend Line Resistance   TLS: Trend Line Support

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