Scary chart obscures opportunity 221001

Markets are turbulent but despite the selling, the double bottom is holding and the S&P 500 is remaining above its 4 year moving average.

Note the attached chart.  Purveyors of fear will use it to scare you.  I offer it as an explanation of a Bear Market versus a Catastrophic Market. 

Listen to the latest episode of the Wealthsteading Podcast for an explanation:

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Forced to sell at the bottom 220929

Today I did something that I NEVER like to do…I was forced to sell, at what I believe is likely a Market bottom.  I won’t list the entirety of what I sold, it was approximately 30% of my portfolio.  The stocks I sold were generally the frailest.

I say “forced” to sell, because my gut instinct is to hold; however, today’s price action triggered a predetermined long term “tripwire” that I use as a “line in the sand” that can’t be crossed.  Rule based logic outweighs emotion.

The tripwire is also being reinforced by deteriorating conditions overseas- sabotage to the natural gas pipeline under the Baltic Sea; UK pension fund panic; and growing concern about Emerging Market currency crisis due to the extreme strength of the US Dollar.  I continue to believe the overall status of the US economy is resilient, but these externalities might prove to be a stock market “Lehman Brothers” type event that would breach support at the 4 year moving average.

I still anticipate a bounce off this double bottom low; however, if my next tripwire is triggered, I’ll take more chips off the table.

This is not yet a time to panic.  A 2023 mild recession is already priced into the Market.  Corporate profits are being adjusted down, but they’re still strong.  Any “good news” type headlines will likely drive at least a short term rally.  Conditions are forming for an excellent opportunity to swing trade between what will likely be a long term range bound market.

As always, trade with caution.

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Double Bottom test of June Low 220925

The S&P 500 is currently forming a double bottom pattern, testing the June 16th low.

NOTE- in a previous post, I stated:  “…the odds of a drop all the way back down to the low is HIGHLY unlikely.”  That was based on the 50% retracement which had taken place in August.

Three quick points-

  1. “HIGHLY unlikely” isn’t DEFINITELY.
  2. So far, the S&P 500 is testing the closing low from June, but hasn’t yet reached or exceeded that level. 
  3. A bounce from the retest is a Bullish signal.

I don’t have time to discuss the attached chart. It’s a jumble of concepts, but I wanted to get the graphic out there.  Tune into the next episode of the Wealthsteading podcast, where I’ll talk about the significance of these lower boundaries.

Spoiler alert…for now, I still believe it’s HIGHLY likely that the Market will “relief rally” into year end.  I don’t think the major impact from the brewing Global Recession hits until 2023.

If you find these ALERTs informative, please share them with a likeminded friend AND reference this post on your website or social media channels.

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50dma uptrend 220910

The 50 day moving average (dma) of the major indexes is trending up, likely indicating the start of a new bull market cycle.

The Markets bottomed on June 16, and then their 50dma’s bottomed a little more than a month later.  Since their July 50dma bottom, the Small Caps 50dma has recovered the most (up 4.7%), followed by the Mid Caps 50dma (up 3.43%), with the S&P 500 50dma bringing up the rear (up 2.84%).

As I’ve mentioned previously, I believe the uptrend could continue at least until the Midterm elections.  Corporate profits have remained resilient and inflation is waning.  For now, the greatest threat appears to be a European recession that drags down the global economy in early 2023.

Time will tell.

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September Stock Market Selloff? 220903

You’ve probably already seen the headlines: September is the worst month of the year for stocks.

True, but how significant? Not much.

The below chart illustrates that over the past six years, two years were down (~-3.5%) and the other four years where either flat or up.  There is a seasonal pattern that implies underperformance for the month of September, but on average, it’s inconsequential.  Since 1950, the average performance for the month of September was 0.54%. 

What will happen this time?  I have no idea, but my cynicism leads me to speculate that the stock market will improve ahead of the midterm elections.

If you find these ALERTs informative, please share them with a likeminded friend AND reference this post on your website or social media channels.

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