Market staggers along…downturn could occur SUDDENLY

The Market has once again shown resilience and recovered half of last week’s losses.  Whether it moves up or down is anyone’s guess.  I’m not being facetious when I say that forecasting conditions are in a “flip a coin” mode.  While the market has been displaying extreme resilience over the past few months, the price-action has been less than supportive.  In recent weeks, selling volume on down days has been much higher than on up days.

So while the S&P 500 remains range bound (fluctuating between 3000-3200), I remain prudently cautious.  Should investor sentiment degrade, market conditions could deteriorate rapidly. 

Note the attached chart.  When COVID fear solidified on March 4, it took only two weeks for the Market to drop over 28%.  The S&P 500 is currently staggering back at those levels. If the 200 day moving average (dma) doesn’t provide support, then a ~10% drop is likely (2700-2800 range).

Will the 200dma hold?  Flip a coin.

For additional commentary, please listen to today’s episode of the Wealthsteading Podcast:

FYI- July 4th is the Wealthsteading Podcast’s sixth anniversary.  Be sure to tune in for a review of the 10 Wealth Building Principles.  Let me know if there are some additional topics that you’d like discussed during our anniversary celebration.


Market back in CORRECTION…

Just a quick update- it looks like the Market might finally be capitulating to the reality of the COVID Re-Opening Consequences.  The Market has been extremely resilient to bad news over the past 8 weeks, but today’s action looks detrimental.

I don’t know if this pullback will hold but I’d like to see further deterioration so that I can put my cash reserves to work. [ Listen to a previous podcast where I discussed buying the dip to re-balance during a COVID recovery: ]

Stay tuned…I plan to release more detailed analysis over the weekend.


Taking some money off the table…

The S&P 500 has recovered to the previous highs of November 2019.  I’m concerned there might be a little too much re-opening exuberance right now.

So to lock in some profits, I sold the following positions:

  • BOTZ             Global X Robotics & Artificial Intelligence ETF
  • GOOGL         Alphabet
  • HACK            Cyber Security ETF
  • NVDA           NVIDIA
  • RYT                S&P 500 Equal Weight Technology ETF
  • UNH              United Health Group
  • XSD                Semiconductor ETF
  • YUMC           Yum China

I’m not worried about a catastrophic meltdown, but I am concerned the market has risen too fast and is ignoring some major uncertainties.  Namely:  Unemployment, China tensions, and the November Election.  You can listen to a brief 10 minute podcast explanation here:

If you’d like an even briefer explanation, here’s a 2 minute video:

Best returns and STAY SAFE !


Suckers Rally coming to an END?

Has the seven week Relief Rally morphed into a Sucker’s Rally?  I hope so.  I’ve been waiting for another buying opportunity.

Today the S&P 500 was down 1.75%, not as bad as yesterday’s 2.05%; and unlike yesterday’s horrible close, today the index improved during the final minutes of trade. 

But things don’t look good.  Over the past three weeks the S&P 500 has been unable to retrace the April high, nor has it been able to get closer than 2% of its 200dma.  Today it also broke below its 20dma.

If the S&P 500 doesn’t find support at its 50dma (~2700) then it’s likely to drop to at least 2600.  At that point, it would even be probable that it could drop down to test the March 23 low (~2200). 

For long term investors, a drop to or below the 50dma would present an excellent buying opportunity.  As always, the exact bottom will be elusive and fruitless to try to pinpoint. 


Bought Tyson Foods

The S&P 500 continues to ping pong around 2850. It has closed poorly for the past two sessions, especially today.

ALERT: today I purchased Tyson Foods TSN. It was a small position, no more than 3% of portfolio value…call me CHICKEN !!!

For a quick explanation of the rationale, please watch this short video:

FYI- comments are always appreciated on the YouTube channel.  I may not have the opportunity to reply, but I do read them all.