When you look at the S&P 500 daily chart to the left you will see that we fired warning 1 when the CBL was broken. We also can see that the 50 day moving average was also broken and confirmed. Some traders at this point will sell even though the overall uptrend is still working. Not only is it still working, but only the short term trend and intermediate trend are in view on this chart. The primary uptrend can only be seen on a larger scale or on the monthly chart. I will use the short term to confirm the finally warning and sell when and if that happens. That point or level is between 1611 on Monday next week to 1623 by the end of the week. The other thing to note is that we are extremely overbought and I would think soon prices will reverse. The question is, when will they reverse back up to the high’s? Who knows. We also could just as well continue to fall next week. Nothing is ever certain in the stock market. I do have levels to watch and levels to bailout.
The younger you are the more you should take a long term approach to the market and do not jerk your monies around. If you hate to watch the markets, then the monthly charts are for you. On the last day of each month, you check price to make sure that it is above the 10 period moving average and if it is, you stay invested. If it is not, then you bail mostly to G but it is possible in certain market conditions that moving to F(bonds), would make sense.
The monthly chart of the S&P 500 to the left shows the last exit and entry signal and the light has been Green for the C-fund for a long time. You will see two red boxes where it was really scary and looked like a bailout was soon to happen, but it never came to be. Looking at the last bar and the current month of August, we are not even close to an exit and it doesn’t even appear to be scary. The monthly charts will give you comfort in volatile markets. Last note, take note of that solid green line that represents the overall primary uptrend and we are still in a monster up tending market.
The Small Cap Daily & Monthly chart above almost perfectly mirror the S&P 500 but the one minor difference is that on the daily chart, only one warning has been fired. On the monthly chart, you can also see we are not even close to firing a sell. Specially when you compare today to the scary times marked on the chart.
The International Index held up pretty well this week considering the S&P and Small Cap where down 2% plus. On the daily chart, the new short term up trend line did fail. Monday if price close higher, it will create a higher pivot low which is always good for trend. This is my newest entry and I would like to see it hold up. Monthly we are still safe.
If you want to look at charts that are screaming stay out and are very negative, then look at Bonds. This week Bonds established a new all time low and if you were bottom fishing, this is the perfect point to act. The monthly chart is a complete disaster.
The markets cannot go straight up all the time. There is always going to be a time when profits have to be taken. This is the definition of a healthy market. Yea, 2% drops in one week stinks, but they are nothing compared to 43% loss in one year. Yup, I have lived through one of those too. I’m going to ride this one out until my charts say to bailout, but I also do understand the concerns of the many when prices drop fast. It’s depressing. If I told you last January I could guarantee you a 14% gain through August, would you turn it down? I think not and that is where I stand so far this year. Still happy and still watching my charts.
Have a great weekend.
No comments:
Post a Comment