Special Bulletin: December 17th, 2018 (2:00PM Update)

The stock market has officially fallen into correction mode today with the Dow, S&P 500 & Nasdaq all down around 1.50% and with all 3 indexes having undercut their recent lows. Our Current Market Outlook has changed to “Market in a Correction” and our light is now “red”. As noted in our recent posts, the markets internals were already weak and the young uptrend was under growing selling pressure. That selling pressure followed thru on Friday and into today and has triggered a 3rd stage sell-signal in our 3 stage sell process. We have increased the cash &/or short-term fixed income levels in of our strategies to current levels ranging from 40% to 100%, depending on the strategy’s objective.

The new motto “the market descends a slope of hope” is at work. While it is possible that at any moment the market could turn on a dime (perhaps even today) and jet higher based on a significant “breaking” news item, the underlying technical picture is still one of a very unhealthy market. A traditional bottoming sequence would take several days to develop after any such meaningful news item. For now, with a big Fed interest rate announcement looming on Wednesday, and a possible US Government shut-down for this weekend, we feel the best course of action is to follow the lead of the “elephants” and reduce risk.

While no one likes to be heavy in cash when the market turns back up, that prudent step to preserve capital allows an investor to relax and think more calmly as events unfold. There will be significant opportunities again in the future and ample time to capitalize on them, but for now the defense is on the field.  

Have a Triumphant day! ®