Sunday, January 27, 2019

To Retest Or Not To Retest

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

There are many opinions on whether or not December 2018 lows for indices are going to be retested.  I believe that major US indices have reached a fork in the road, one path is to advance higher to challenge recent all-time highs and the other path is to sell-off to retest December lows and possibly to continue going lower.  Nobody knows for sure which path indices would take but the next four trading days will be very telling.

Last December, as shown in SPX monthly chart above, SPX broke through its M-DTL and began trading below it.  Since then, M-DTL, which had been acting as a strong support for SPX since early 2016, has become a strong resistance.  Last Monday M-DTL stopped the recent rally that started in late December.

There are four trading days left in January.  If SPX cannot close, by at least 0.5%, above its M-DTL (currently at 2683) in those four days, there would be a greater than 66% chance that December lows would get retested sometime in early February.  Should that retest fail, SPX would very likely sell-off more to test PUL-2 and PUL-1 supports around 2300 to 2200.

SGS advanced sharply last week.  Should rally since December lows continue, there would be a high chance that SGS turn NEUTRAL or even LONG by week's end.  

Support and resistance levels for SPX for this week are shown above.

My Plan

I'm still in cash and looking for an entry to open my first of three long positions. 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.