Sunday, October 13, 2019

Say Hello To QE For Ever :)

SGS  Market Timer Status:  NEUTRAL 
NEUTRAL as of the close of Friday Oct 4, 2019
SGS is a Long-Term (weeks to months) Timer
Why Market Timing Is A Must



It seems that Friday's big rally was not because of what was announced in regard to US / China trade negotiation but the rally was due to the announcement by the Federal Reserve in regard to REPO.  In short, starting this week the Fed is to expand its balance sheet and buy $60 billion of US T-bills every month for at least the next nine months.

It's hard to understand why the New York Fed has to intervene in REPO and buy the collateral (all short-term US T bills) put forth by a temporarily distressed bank so that bank can borrow money overnight at the Fed funds rate. Why other banks are refusing to lend money to that bank?  Is it because that bank is about to go under? Is that big bank Deutsche Bank? Does that have anything to do with the Deutsche Bank money laundering for its Russian clients? Is Trump organization involved with any of this? Is all of this going to come out once the Congress gets Trump tax returns? Am I watching too many episodes of Conspiracy Today with Bill Flatearth? :)

SGS declined last week but still remained NEUTRAL.


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


My Plan

It seems to me for whatever reason the Fed has decided to pump money, albeit indirectly as they did with previous QE's, into equity markets. If that's indeed the case, then indices would rise so long as the Fed continues expanding its balance sheet.  If the rally that started last Wednesday continues this week, then regardless of what the Fed calls its new expansion, it is just another QE similar to previous three QE's.


Last week per my plan I opened my first two positions in SPXU.  That was a mistake because SGS had not gone SHORT.  I got in front of the market, and when you are in front of the market, you are exposing your behind.  I think there is a good chance SPX sells off early Monday to test its ASL.  My plan is to close my positions as SPX test its ASL around 2945 or if SPX takes out its Friday's HOD around 2993.
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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.

Sunday, October 6, 2019

SGS Market Timer Is NEUTRAL

SGS  Market Timer Status:  NEUTRAL 
NEUTRAL as of the close of Friday Oct 4, 2019
SGS is a Long-Term (weeks to months) Timer
Why Market Timing Is A Must



Recent macro economic data is signalling that the US Economy is either in a recession or very close to entering one.  Post WWII, on average, a recession lasted around 18 months and US indices corrected around 20%.  If the economy is in a recession or about to enter one, the market correction could be worse this time because:
  • Trade War Escalation - China is on to the fact that Trump has become politically weak and they could just wait him out. Chances of a trade agreement anytime soon would be slim unless Trump capitulates and folds.   In that case, we would see resignations by Navarro and Lighthizer before a final or an interim deal is announced.
  • Impeachment and Possible Removal of POTUS - Democrats will impeach Trump and move to the Senate to remove him.  They would need at least 20 Republican senators to vote with them for Trump's removal.  As it happens there are exactly 20 Republican senators who are not up for re-election in 2020. If the Republican leadership in the Senate determines that, in addition to the WH and the House, they would also lose the Senate in the 2020 election with Trump at the top of the ticket, they would not hesitate to remove Trump.  In that case, we would see initially people like Romney and Kasich start to advocate Trump's removal in opinion pieces  and open letters.
  • War In The Middle East - A war against Iran almost started shortly after the attack on Saudi's oil installations. It seems that MBS and MBZ chickened out.  There is a slim probability that Trump and Pompeo start a war to distract from Trump's impeachment.

SGS declined last week and on Friday changed it status from LONG to NEUTRAL.


Support and resistance levels for SPX for this week are shown above.  Last week, SPX tested strong and critical support at its M-DTL (13 M-EMA) around 2850. A close below 2850 this week or next would signal a high likelihood of significant selling ahead.


My Plan

With SGS at NEUTRAL and heading lower, my plan is to open my first of two long positions (80% of total capital) in SPXU and a long position (20% of total capital) in GLD.
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opader@gmail.com


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.