Special Bulletin: September 4, 2019

Investor discretion is still advised.

The stock market remains at a major inflection point. The current rally attempt is being held hostage by negative reports regarding the China trade war and angst over the next Fed interest rate decision. The bulls are waiting for a catalyst to drive it higher, while the bears are convinced a recession is eminent and the next major leg is down. All in all, the outcome of the current standoff remains very uncertain.

Yet, due to the fact that the market hasn’t collapsed already under the weight of all the bad sounding news, the math of the market has improved slightly over the past two weeks. As a result, our Current Market Outlook is being upgraded to “Uptrend Under Pressure” with a “yellow” light.  Taking a look at our “Core Four” internal indicators reveals two green and two yellow signals. Net result: a yellow condition.

The major market indexes are still stuck in a narrow trading range where sellers are unloading shares at the 50 day moving average, and buyers are stepping up near the August 5th lows. This tight trading range will not go on forever and reflects the uncertainty of investors and traders from all over the world. We don’t expect our new C.M.O. signal to stay yellow for long. A strong move to either a green condition or back to red is likely by the middle to end of September.

What to do now? Tomorrow, Friday and Monday will likely feature an important test as the major stock indexes are perched just under their 50 day moving averages. Investors should continue waiting for a closing price violation through either the top or bottom of the range on huge trading volume as a reaction to a significant event. If things improve, there will be ample opportunity to make money. If conditions deteriorate quickly, investors will wish that they had prepared and executed an exit strategy.  

Have a Triumphant day! ®