QE-FE Finds Its Way Into The Market

SGS  Market Timer Status:  LONG 
LONG as of the close of Friday Oct 25, 2019
SGS is a Long-Term (weeks to months) Timer
Why Market Timing Is A Must

It took the market only a couple of days to figure out how to bring the money injected into the economy by the Fed's new QE program into equities. Since 2009, as shown on the chart above, once the QE money finds its way into equities, indices rally. With $60 billion coming in every month between now and end of June 2020, indices have no where to go but higher.  

SGS advanced last week and changed its status to LONG.

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

My Plan

Per my plan I opened a new long position in SSO on Tuesday (one position with 100% of capital).  I'm using SGS-ST to short-term trade all long-term accounts.

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

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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.

The 2020 Triangle Dance

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

There are three parties involved in the 2020 presidential election campaign, namely DNC, RNC, and Trump.  Below is my take on how these parties are trying to achieve their objectives prior to the 2020 election:

• DNC - DNC is trying to make sure that Biden is the Democratic nominee.  In 2015 DNC was fully behind Clinton and did all that it could  to stop the momentum of Sander's campaign.  In 2019, again DNC is doing its best to make sure that Warren and Sander don't pick up any momentum and pull substantially ahead of Biden in polls and fund raising.  For example, in the last Democratic debate, DNC relaxed participation requirements to have more candidates (12 candidates) on the stage  than they did in the previous debate (10 candidates).  For the next debate in November, DNC is planning for 14 candidates to "qualify" to participate.  By having more candidates on the stage, DNC's corrupt intention is to minimize publicity and exposure for Warren and Sanders.
  
  As for the 2020 presidential election, Democrats are hoping that their nominee faces Trump.  They will surely impeach Trump but have no plan to remove him since Trump's removal would mean the Democratic nominee would face a prominent Republican like Romney or Kasich. In order to give little campaign time to a possible Republican nominee other than Trump, Democrats will prolong the impeachment process  as long as they can, without risking the loss of public interest.

• RNC - With Trump as the head of RNC, Republicans are in between a rock and a hard place. They realize that with Trump as their nominee in the 2020 election, not only they would lose the White House, but they could also lose the Senate. There is a good chance that Republicans decide to remove Trump and take their chances in the election with either Romney or Kasich. They're hoping that the House impeaches Trump by Thanksgiving and he is removed shortly after.  I'm looking to see if McConnell moves to pass a rule change resolution so senators could vote in a secret ballot to remove Trump. 
  
  Republicans are also eyeing how Biden is doing in polls and fund raising. If it becomes clear that Biden wouldn't be the likely Democratic nominee, Trump's removal would become even more crucial for Republicans.

• Trump -  Knowing the erratic and chaotic nature of Trump, it's hard to predict what he would do between now and the election.  Assuming Trump survives the pending impeachment and removal by the Congress, there is a good chance that he would resign if he sees that he is going to lose his second term election in a landslide.  If he chooses to resign, Trump being Trump, he would do it in a way that it would inflict maximum pain and damage to the Republican party and their replacement nominee.  That is not going unnoticed by Republicans.

SGS advanced last week but still remained NEUTRAL.

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

My Plan

Last week, per my plan I closed my long SPXU positions.  My long-term portfolio is down around 13% this year, ouch, my worst year ever. 

Going forward, I believe SPX would be trading in a 1000 point trading range (roughly 2200 to 3200) for the next few years.  If SPX falls out of that range, it could go substantially lower to test support at its peaks prior to 2008 crash around 1575-1550.  My plan is to short-term (hours to days) trade my long-term accounts using SGS-ST (One of these days, I'm going to do on SGS Short-Term explaining how SGS-ST works. In short, it measures the total area between 13 and 39 EMA's in SPX hourly chart.  It also measures the growth rate of that area to determine overbought and oversold levels).  I'm still going to use SGS to decide which SPX ETF's is used for short-term trades.

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

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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.

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.

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

twitter
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.

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.

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

twitter
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.