Sunday, October 20, 2019

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.

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.