Sunday, January 6, 2019

plus ca change, plus c'est la meme chose

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

Economic crisis avoidance was on full display on Friday when Ben and Janet held Jay's hands as he cried uncle.  That pleased the market.  Jay finally understood that Hands of the Fed are in no mood to be asked to return the assets they "hold" for the Fed.  Jay, like Janet and Ben before him, is a quick learner. It took him only three months and a 20% sell-off  to learn that when the global economy and the working class retirement are held as hostages, there is no negotiation.  It's a total and unconditional surrender.

The above chart shows all four sizable corrections for SPX, including the current correction, since March of 2009.  In light of what happened on Friday morning (Powell PUT is in), there is a better than 70% chance that SPX bottomed on December 26 at 2346.  There is also a 30% chance that the December 26 low would get successfully tested sometime this month.  Even if the retest of 2346 fails, there is only a slim chance that SPX trades below 2200.

After bottoming at -1741 on December 26, SGS advanced sharply in the last six trading days.  The sharp reversal of SGS signals that there is a better than 90% chance that the lows printed on December 26 for major indices was the bottom for the recent sell-off.

Support and resistance levels for SPX for the upcoming week are shown above. Short-term, there is a high chance that the rally that started on December 26 continues as SPX tests its overhead resistance levels.

My Plan

I'm still in cash and watching the action from the sideline. A weekly close above 2700 is the green light I would be looking for to open long positions in seven to 10 stocks.

Current Long-Term Portfolio (2019)
Past Long-Term Portfolios (2018-2008)


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.