While these markets are NO FUN, this is where markets separate the “men from the boys.” Will we take opportunity as it comes knocking, or run for cover?
RULES, RULES, RULES. And the rules tell us now, with the most BULLISH line-up on the Asset Scale (Equities #1, International #2–this way since 2011—VERSUS Bonds #1, Commodities #2 in 2008) that we will not run for cover, but hunker down and find the opportunistic BOUNCE that is coming our way.
Yes, we did just break below the 200 day moving average on the S&P 500, the most current, yet in fairness, somewhat high quality “NOISE.” BUT did you know that the last time we did, November 2012, we stayed below the 200 day for a mere 7 days before rallying into a 30%+ year with 2013?
IF, we had seen an accompanying shift in asset classes, that pointed to darker times, it would behoove me to say so. Eternal optimists, we are not, but DISCIPLINED to our rules, we are.
This from our “data doctors” (all facts) at Dorsey Wright:
- The overall trend of the SPX remains positive at this time. The long term Bullish Support Line currently lies at 1820 (currently at 1905).
- With Monday’s market action, the SPX has breached its 200-day moving average, which lied at roughly 1905. This is the first time the SPX has moved below its 200-day MA since mid-November 2012; at that time, the SPX only stayed below its 200-day MA for seven trading days before rallying back.
- The recent trend chart action of the S&P 500 Index looks similar to what we saw back in May-June 2013 when the market corrected roughly -6.5%, and also to how it looked back in November 2012 when the SPX dropped approximately -8.2%. Yet each time this happened, the SPX held its long term positive trend and subsequently rallied to new all-time highs.
Not all is dark and gloomy—did you know that we took a position in DUG (an ETF that shorts Oil/Gas) on 9/30 and since then we are up 23%?
Now that indicators are such LOW risk levels–the NYSE Bullish Percent, remember was at 70% July 2014, and now sits at sub 40%—we will be able to take more opportunity with positions like DUG, where appropriate given individual client risk preferences.
BOTTOM LINE: The RISK on the field has changed from High to LOW (70% to 38%) with no change in Bullish indicators. Its football season, so you fans here it is; We had the football (offense), fumbled it (went to defense 7/31/2014) and now our opponent is 4 down and 25 on their 30 yard line. GET IT? We are about to take possession of the ball, and, with good field position.
Not sure if you’re in the right allocation? Schedule a call or meeting today!
In the meanwhile, QUIET THE NOISE and know that we have you MANAGED.
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Most of my blogs are less than 200 words – short and sweet! I have 2 weekly posts one is uber-short and the other highlights our Investment Management “Rules” with one Rule detailed each week.
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