Sunday, December 30, 2018

A Bottom Or The Bottom Is Near

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

Trading is about understanding and accessing probabilities that exist between zero and 100 percent certainties.  Take the current sell-off for example, we can state with 100% certainty that the current sell-off either ended last week or will end at some point in the future.  We can also state with 100% certainty that, at the worst, indices bottom at zero someday in the future, hopefully very far.  When and at what levels major indices bottom for the current sell-off, cannot be determined or calculated as a certainty. Using technical, fundamental analyses and common sense, it can only be predicted as a probability.

The above chart shows all four corrections for SPX, including the on-going correction, that were greater than 15% since March of 2009.  My analysis, which includes trend, breadth, and internal data, shows that, as of the close of Friday, there is a 70% chance  that SPX bottoms in early January of 2019 somewhere between 2300 and 2200 as it tests supports at its PUL-2 and PUL-1.  My analysis also leaves a 30% chance of SPX selling-off an additional 15% to 20% to test support around 1800.

SGS declined last Monday and Wednesday before heading higher on Thursday and Friday.  SGS is still deep in the SHORT territory which signals that the selling very likely continues. 

Support and resistance levels for SPX for the upcoming week are shown above. Short-term, indices are still at extreme and historic oversold levels.  There is a high chance that the rally that start last Wednesday continues into the first week of January as SPX tests resistance levels at 2550 and 2625.

My Plan

I'm in cash, and after three losing years, I'm happy that I'm closing 2018 with a double digit gain.  I'm watching how indices trade in the first couple of days of the new year and will make a decision on opening new positions in my long-term portfolio. 

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.