Sunday, January 20, 2019

The Bull Case

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

Q4 earnings reports and outlook have been mostly positive for those companies that have  reported so far.  On Friday January 4, current and past Fed. heads assured financial markets that "Fed PUT" is still in and continues to be in for the foreseeable future.  Inflation data is tamed, GDP growth data has been bullish, and unemployment is at historic low levels.

Major indices have rallied around 10% to 15% in the last 16 trading days with bullish internals and breadth. All seven major indices (RUT, DJT, DJI, SPX, NAZ, OEX, and NDX) are now trading above their 50 D-SMA while number of new 52-week lows have reduced to benign levels that usually accompany a bull leg. 

There is chaos in Washington DC but that will get sorted out one way or another in the next few months.  My guess is that Trump would be forced to resign.

After bottoming at -1741 on December 26, SGS advanced sharply in the last 16 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. 

My Plan

All five major indices (DJI, DJT, NAZ, RUT, and SPX) are now trading above their  50 D-SMA's.  SGS is still short but there is a 70% or higher chance that it would turn NEUTRAL or even LONG by Friday.  My plan is to do my first of three buys early this week in SPY (30%) and the following stocks (10% each):

6. UNP
7. SBUX 

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.