The S&P 500 was down 3.79% for the week. Ouch! The bears took the bulls behind the wood shed and let them have it! Of course, all is not lost for the bulls. The S&P 500 starts the week on support, is a possible double bottom and ABC correction (The markets move in legs…leg up, leg down, etc…An ABC correction is simply a leg down, up and then down again before another advance to the upside.).
I think what is most interesting is our longer-term indicators are close to signaling a bear market. We have to wait for the trigger until the end of this month only a week away. If last Friday was the last day of the month, the signals would have triggered sell. So, it is important for the bulls to show their power by the end of the week if they are going to keep the signals positive.
There doesn’t seem to be a lot of safety in the markets right now. The US equities have proven volatile over the past couple/few months. Commodities (in general) and international indices (again in general)…forget about it! So what to do…we are going to stick to our guns on the stop losses. Better to preserve capital and have more powder in the keg! Another part is income. Income positions are a possibility as they are purchased to produce income and hold value over time. This means the sell rules are different as they are based upon income and NOT price fluctuation like growth positions.
This week should be interesting as the longer-term triggers are closing at the end of the week. Also, we are starting the week on support, so we’ll see if the bears can keep pressure on the bulls or if they are out of gun powder. We’ll be watching closely! Have a great week!
Adam Straseske, CMT