Sunday, March 29, 2020

Where Do We Go Now

SGS  Market Timer Status:  SHORT 
SGS is a Long-Term (weeks to months) Timer
Why Market Timing Is A Must

sgs-st Market Timer Status: 

sgs-st is a Short-Term (hours to days) Timer

There are many predictions as far as where the US economy and markets are heading. They range from "the greatest depression ever" to "a V shape recovery in a few months". I think somewhere in the middle is where we go now. By the time that we see a light at the end of the tunnel, major indices would correct around 50% to 60% from their all-time highs. It's going to take time, maybe a year to 18 months, before we see any sign of an economic recovery, and that's very likely when and where indices bottom. Residential real estate probably won't get hurt as bad because of historically low interest rates, but a 20% to 30% correction in residential real estate market is likely in the cards.

SGS continued to advance higher everyday last week, signaling that a temporary bottom was reached last Monday for major US indices.  If SGS levels off in the next few trading days, there would be a good chance that indices go sideways for an extended period, possibly a few weeks to a couple of months.

Support and resistance levels for SPX for this week are shown above.  SPX, from its all-time high (3393) on February 19 to its recent low (2191) on March 23 corrected 35.4% at an insane pace.  Then from the low of last Monday, SPX rallied 20.3% to its high on Thursday, at an even more insane pace.  I have no firm idea where SPX is heading in the short-term. My best guess is that SPX has entered into a choppy and volatile trading range for the next few weeks to a couple of months. 

My Plan

Per my plan outlined last week, I closed my long SPY and QQQ positions last Thursday.  Short-term, I am not sure where indices are heading.  I'm going to stay in cash for now.


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.