Sunday, April 19, 2020

Counter-Trend Rally Is Very Likely Complete

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: 

Pegging issue still not fully resolved.
sgs-st is a Short-Term (hours to days) Timer

Since 2000, excluding the current bear market, there were four bear markets during which SPX corrected at least 20%. In everyone of those four corrections, the first down-leg corrected about 15% in seven weeks. Following the first down-leg, the first counter-trend rally retraced the first down-leg by 60% over the course of four weeks. After the initial down-leg and its counter-trend rally were completed, the correction resumed at a much lower pace; and on average, SPX corrected another 22% during the following nine months.

For the current correction, the first down-leg corrected a whopping 35% in seven weeks. So far the counter-trend rally from the recent low (2191 on March 23) has retraced the first down-leg by 60% in the last four weeks. Assuming the current correction continues to follow the same pattern as the last four bear market corrections, it is very likely that the first counter-trend rally of the current correction was completed last Friday. Selling very likely resumes soon, at a much lower pace, for possibly another 22% over the course of next nine months.

SGS continued to advance higher everyday last week, signaling that a bottom was reached on March 23 for major US indices. 

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

My Plan

Per my plan I added to my SDS position on Thursday and Friday last week.  


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.