Sunday, September 27, 2020

Chaos Is Coming Sooner Than Expected

SGS  Market Timer Status:  NEUTRAL 
NEUTRAL as of the close of Friday Sep 25, 2020
SGS is a Long-Term (weeks to months) Timer
Why Market Timing Is A Must

The widely expected election chaos will not happen after the election while ballots are being counted because there is a good chance that the Democratic win will be massive and historic.  My guess is that sometime in early hours of November 4, the Republican rank-and-file will concede.  They will also call on Trump to honor a peaceful transition of power that has been a tradition and a norm for 220 years in our country.  

After all ballots are counted, my guess (below) is  that the 2020 election will be recorded as a historic win for Democrats and a devastating loss for Republicans.
  • Electoral College Vote: Biden 400+ / Trump 130-
  • Popular Vote: Biden 60+% / Trump 40-%
  • US Senate: 52+ Democrats / 48- Republicans
  • US House: Democrats will add 5+ more seats
  • Trump resignation prior to Jan 20, 2021 is likely
The chaos, however, will start shortly after the first presidential debate and will continue until the election day, November 3, 2020.  There is a good chance that indices will suffer during this period and give back between 40% to 60% of their gains since their March lows.

SGS Market Timer

As of close of last Friday, the value of SGS is -26.  SGS status changed from LONG back to NEUTRAL.

Support and resistance levels for SPX for next week are shown above.  There is a good chance that the rally that started last Friday continues early this week and SPX retraces back between 40% to 60% of its recent losses.  After that, chances of indices resuming their sell-off are high.

My Plan

With SGS turning NEUTRAL, my plan is to close my SPY and QQQ long positions sometime early this 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.