Sunday, June 9, 2019

SGS Market Timer Is NEUTRAL

SGS  Market Timer Status:  NEUTRAL 
NEUTRAL as of the close of Friday Jun 7, 2019
SGS is a Long-Term (weeks to months) Timer
Why Market Timing Is A Must

As shown on the SPX monthly chart above, SPX bounced off of its M-DTL strongly and retraced around 60% of its recent sell-off from its all-time high 2954 to 2728 recent low.  The strong rally last week was due to the Fed's willingness to cut interest rates aggressively to prevent a recession.  If the US economy is heading in to a recession, I'm not sure how cutting rates would prevent it.  The two recessions in the last 20 years (2000 to 2002 and 2008-2009) still happened despite aggressive rate cuts by the Fed.  It was the massive injection of money into the economy, via Iraq War in 2003 and QE in 2008, that ended the last two recessions.

The rally last week had all characteristics of a short-covering rally. If SPX resume its sell-off this week and dips below its M-DTL, there would be a high chance that SPX declines much more.

SGS advanced last week and closed at +29 on Friday. SGS status changed from SHORT to NEUTRAL.

Support and resistance levels for SPX for this week are shown above.  For SPX, a close above 2900 would signal a high likelihood that rally continues to challenge recent all-time high.

My Plan

I did expect a counter-trend rally but not as strong as what was started on Tuesday and continued into close on Friday.  I expect the sell-off in indices resume soon but a close above 2900 sometime this week would be a signal form me to close all open SDS positions.

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.