(11:10 am Update) Just over one hour ago Chinese trade representatives held a press conference and announced details of the Phase One trade deal with the US. (The President had tweeted yesterday that a deal was very close. He was right, again.) Initially, the stock market rallied sharply on the news. As of this moment, the indexes are near their flat lines with a small loss on S&P500 and small gain on Nasdaq. As is often the case on Wall Street, an old adage may apply to this situation: “Buy the rumor, sell the news.” Only time will tell if this “news” will be received well by the investing community or not, but for now the technical condition of the stock market remains sound and our Current Market Outlook is “Market in an Uptrend” with a “green” light. Based on continued strong technical action in the stock market, all four of our “Core Four” internal indicators remain green. The major indexes are fresh off of all-time highs, a continuing confirmation, and the volatility index (VIX) has settled down, at least for now. Is there a year-end rally yet to come? We don’t know. We’ve had a good one already. The urge to take some profits will likely grow over the next several day. It would not be surprising to see the market even correct 3-5% over the next few weeks.
What can investors do now? Continue to give your winners room to grow while keeping losses small. Taking partial or even full profits on holdings that have advanced 20% or more is viewed as wise, according to research by Investors Business Daily. When committing new money, select fundamentally and technically superior stocks that are breaking out with strong volume. When playing defense, employ the 21 day moving average on the major indexes first and use it as a “tell” about the short-term health of the market.
Merry Christmas and Have a Triumphant day! ® Ps. Happy birthday to our dear friend Mort!