Special Bulletin: April 13, 2024

A Catalyst: Has it Arrived?

Last week we wrote, “We see a “low (downward) pressure” system fast approaching for the stock market. The question now is will it be just a gentle shower or a more violent storm?” 

That question is being answered today, Saturday, April 13th. Due to yesterday’s news of a possible Iranian attack on Israel over this weekend, we waited to write this post until tonight. Unfortunately, an attack (by drones at least), is in process at this moment. Please pray for God’s will to be done and for Him to preserve lives (that Satan – evil – is threatening) and to bring peace quickly.

Throughout stock market history, when markets reach certain technical extremes, it almost always takes a catalyst to begin a move in the opposite direction. This works to bring markets out of a downtrend, too – think of the Fed’s interest rate announcements last November and December as examples of that. But many times in history, the catalysts have been a sudden negative that derails an uptrend (e.g. Covid in 2020). Today’s attack (and potential for an expanding Middle East war) has the capability of being such a negative catalyst for the stock market right now.

Monday could be brutal for the financial markets. But it could also prove to be a non-event if the Iranian attack is minimal or non-existent. Key technical levels (primarily the 50-day and 10-week mav’s) of the major indexes are being seriously tested (or have been slightly violated) as of Friday’s close. This has created the backdrop for a significant flashpoint for the stock markets on Monday and Tuesday. 

Our Current Market Outlook remains “Uptrend Under Pressure” with a yellow light (SPX 5,123.41). Our “Core Four” (see top of page) remains weak and has 1 green, 1 yellow and 2 red lights with a VIX that has launched well above its 50-day mav. A “red” condition could come as early as Monday. That means that the stock market could now be seen as under a “tornado watch.”

Last week we also penned, “Do you know where your umbrella is? More importantly, do you have a storm shelter in place?” The adage “plan your work and work your plan” applies to your portfolio also. Developing/maintaining an exit strategy and then putting it into motion as new evidence arrives and dictates your doing so will be critical for the coming week.

A few of the secondary indexes have already broken key support at their 50-day mav’s (look at the chart of the Dow Jones Industrials Average as an example) and are suggesting institutional investors have been/are lightening up.

Much will be determined regarding the stock market’s next move by the events over this weekend. Please pray.

“Therefore, confess your sins to one another, and pray for one another so that you may be healed. The effective prayer of a righteous man can accomplish much.” James 5:16 NASB 1995

Game plan: Remain calm. Create a plan. This is a time for courage and NOT a time to be a deer in the headlights. The major indexes are well below their 10 & 21-day mav’s and are under growing pressure to fail at their all-important 50-day/10-week mav’s. The critical test of institutional support is underway. Please pray for the peace of Jerusalem, for all of Israel (Psalm 122:6-7). May they prosper who love her.

Note: You can learn more about The Triumphant Core Four risk management system by clicking here.

Have a Triumphant day! ®