S&P 500 Tests Bottom of Trading Range

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Bull / Bear Market

The S&P 500 weekly performance proved to all the non-believers that the equity markets are not for the faint of heart. The S&P 500 closed the week down 5.95% after the bell saved the index from additional destruction. Although the S&P 500 has had a very difficult week, it is starting on support for the week. We could see some buying pressure this week causing a double bottom. It is bearish that the week finished on it’s lows, but if we don’t see immediate follow through, it gives credence to the bulls.

Index Swings

The swing indexes we like are the following: United Kingdom / Japan / Oil / Extended Treasury / Australia / Brazil / International Government Inflation-Protection Bonds / EAFE Value

There were a couple of our indexes that performed well this week. They were International Government Inflation-Protection Bonds and Oil. Oil had the best week by far. It was up 5.56% for the week. It is basically at resistance so we are waiting to see if we can get a new high and clear this resistance level.

The remainder of the indexes did not fare as well. They were down for the week. The one we are closest to stopping out in is Japan. We have adjusted the stop up twice in Japan. Almost all of the remainder have second purchase prices further down so well see if we can get some lower action so we get the opportunity for some buy signals.

This Week

The S&P 500 is starting the week off close to support as the last time we got down to this level the S&P 500 bounced higher. Of course the stock market has gotten weaker than where it was two months ago, but all is not lost for the bulls just quite yet. On a longer term basis this is only what could be the second leg down out of two legs down…or what many would call an ABC correction. If the measured move plays out and the second leg down is as large as the first leg down; that puts the S&P 500 at about 2465 (about 5% lower). It is not a perfect correlation, but if this does play out, that is where we have at least a few of our second purchase ranges. This should be an interesting, short week!

The Education/Gratitude Book Club

This month’s book is “Learn like Einstein: Memorize More, Read Faster, Focus Better, and Master Anything with Ease…Become an Expert in Record Time,” by Peter Hollins. We are almost finished with this one and on to the next one for March. Have a great week!

Warm regards,

Adam Straseske, CMT

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