Sunday, February 26, 2023

The Big Worry

SGS Market Timer Status:  SHORT 
SHORT as of the close of Friday February 24, 2023 
Previous SGS Status

SGS is a Long-Term (weeks to months) Timer
SGS Performance Data (New)
Why Market Timing Is A Must

The big worry of financial markets, as it was on full display last week when both stocks and bonds sold off substantially, is that the current aggressive rate hike plan by the Fed will balloon the budget deficit. That in turn would force the US Treasury to sell more debt at higher and higher interest rates. In other words, as the Fed raises short-term rates and slows down economic activities, the budget deficit balloons causing longer term rates to go higher. Higher longer term rates (5 years or higher) would also add to the slowdown causing an even higher budget deficit. This cycle could repeat itself until the economy ends up in a deep and prolonged recession during which indices would go substantially lower.

SGS Market Timer

As of the close of last Friday (2/24), the value of SGS was calculated to be -93.  The status of SGS changed from LONG to SHORT.

S&P 500 Support And Resistance Levels

Support and resistance levels for SPX for this week are shown above.  SPX is oversold and chances of a sizable short-covering rally is high.

My Plan

Per my plan I did buy XLF (10%) and XLV (10%) last week.  With SGS being SHORT now, I'm watching the daily value of SGS this week to decide to if and when to sell my long positions and move into cash.


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.