Sunday, May 31, 2020

When Technical Analysis Fails

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

Major indices are only a few percent away from their all-time highs while all macro economic data are at historic near depression lows. I have no idea how long this divergence is going to continue but under these conditions technical analysis fails to predict the future direction of indices.

My Plan

I am going to take the summer off from trading and resume blogging after labor day. If something major happens between now and then, I would post my thoughts and plans.

I'm in cash in my long-term accounts and planning to stay on the side line.  Have a great summer :).

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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.
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Monday, May 25, 2020

Critical Week Is Ahead

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

sgs-st Market Timer Status:  long 
sgs-st is a Short-Term (hours to days) Timer


SPX is advancing to back-test its 200 D-SMA. A weekly close above 3000 would be bullish. Also a monthly close below its M-DTL (13 M-EMA) around 2930 would be extremely bearish.

SGS continued its advance last week and on Friday changed its status from NEUTRAL to LONG.
Support and resistance levels for SPX for this week are shown above.


My Plan
I'm in cash and planning to stay on the side line this week.


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opader@gmail.com

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.
on

Sunday, May 10, 2020

Selling Likely Resumes

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

sgs-st Market Timer Status:  long 
sgs-st is a Short-Term (hours to days) Timer


Last week in my post, I showed that SPX is in a back-testing stage of its Monthly Dynamic Trend Line (M-DTL, Monthly 13 EMA). Last Friday, SPX closed right on its M-DTL. If indices are to sell-off again to test their March lows, then that selling should start this week.

SGS continued its advance last week and its value on Friday calculated to by +21.  The status of SGS remains NEUTRAL.
Support and resistance levels for SPX for this week are shown above.


My Plan
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opader@gmail.com

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.
on

Sunday, May 3, 2020

The Second And Final Leg

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

sgs-st Market Timer Status:  short 
sgs-st is a Short-Term (hours to days) Timer


As shown on the SPX monthly chart above, both "Sub-Prime" and "Dot-Com" crashes had two two distinct down-legs. During the first down-leg (large red arrows on the chart), SPX crashed through its M-DTL and closed below it in a swift move from its all-time high at the time. Then SPX rallied, in a powerful counter-rend move, back-tested its M-DTL and closed below it to finish the first down-leg of the correction. The second down-leg of the correction for both "Sub-Prime" and "Doc-Com" started after SPX failed to close above its M-DTL (blue arrows on the chart) and continued for months until the correction was completed.

For the current on-going correction, there is a good chance that SPX finished its first down-leg and started on its second down-leg last Thursday when it failed to close above its M-DTL. Assuming SPX follows the same pattern as the two previous major corrections, SPX very likely bottoms somewhere between 1800 to 1700 sometime in early to mid 2021. I think at that point, maybe an effective vaccine along with a massive fiscal stimulus to rebuilt the infrastructure, will start a new bull leg in equity markets under a new administration.

There is of course another possibility that SPX continues its counter-trend rally on the back of unlimited monetary stimulus by the Fed.  Where SPX and equity markets end up in that case is beyond my understanding and past experience.

SGS continued its advance last week and on Friday closed above -50.  SGS changed its status from SHORT to NEUTRAL.
Support and resistance levels for SPX for this week are shown above.


My Plan

sgs-st went short last Thursday and I moved 100% into SPXU.  Now with SGS turning NEUTRAL on Friday, my plan is to close 1/3 of my SPXU position on Monday.  See table below:




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opader@gmail.com

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.
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