Sunday, November 25, 2018

Short-term, Indices Are Oversold

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

Major indices declined last week but market breadth and internals improved significantly. There is a good chance that indices are oversold in the short-term and we could see a counter-trend rally on the back of short covering early this week.

As shown above, the "bottom head & shoulders" price pattern on SPX daily chart is still in play.  There is still a good chance that SPX rallies early this week to test the Neck Line around 2810 to 2820. 

SGS declined early last week but advanced on Wednesday and Friday.  SGS is still in SHORT territory, signalling that, in the long-term (weeks to months), there is still a high chance (> 70%) that major indices continue trading lower.

Support and resistance levels for SPX for the upcoming week are shown above. 

My Plan

No change since last week, I'm still in cash and going to watch internal data as SPX trades around 2700 early this week.  I'm specifically looking at the number of new lows for yearly, quarterly, and monthly time frames.  If the sell-off is done and indices are to move higher to challenge their all-time highs, then the number of new lows should drop significantly in those time frames.  Otherwise, what's going on is nothing but a bear market counter-trend rally to trap bulls.

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


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.