“Green” is the new black. This week the math of the market sent bullish signals as the markets achieved the final piece of the necessary “core 4” specific technical events to affect an upgrade in our Current Market Outlook to “Market in an Uptrend” and a “green” light. Today the S&P500 successfully closed over its 50day moving average, just 2 days after the Nasdaq did the same. That core element came on the heals of the new 52 week lows shrinking considerably last week; a confirmed follow through day on Jan 4th (Day 7); and the extreme “blast-off” technical readings registered in the days immediately before & right after Christmas day. (Please see previous posts from 12/27 forward for discussions on each)
While this is encouraging news for the bulls, the bottom-building process is still in effect. According to the past work of Art Huprich, CMT, that process usually involves a “Low, Rally, Retest” sequence. At this point the markets have had the low and the rally. Our own research reveals that a probable “higher low” (a “retest”) in the indexes historically occurs 6 – 8 weeks from the original low. (That was Dec 24th, 2018)
It is possible that the market could keep going sideways to up and not offer a traditional “higher low” this time around. On the other hand, investors should consciously prepare for some news event in the weeks ahead that may cause one more severe round of price volatility and disruption. (There is still plenty of event risk lurking out there!) Watch for the bears to try to take control of the markets direction again. The current index levels around their 50 day moving averages is a probable area of short-term resistance. Plan to make initial/additional purchases in quality investments on reasonable market pullbacks between now & March 1st. (The China trade deadline)
We have been gradually increasing our exposure to equities in our various strategies since the start of the year as the markets technical picture continued to show measurable steps of improvement. Currently our strategies cash/short-term fixed income levels stand at 15%, 27%, 30%, 34%, 55%, & 65%. As we daily monitor the “footprints of money” our disciplined risk management process will keep us on the right side of the markets next major trend.
Have a Triumphant day! ® Ps. Happy birthday to my son-in-law Justin!
The information in this article is based on data obtained from recognized services and sources and is believed to be reliable. Any opinions, projections or recommendations in this report are subject to change without notice and are not intended as individual investment advice. Not to be used as legal or tax advice. ©2019 Triumphant Portfolio Management, LLC.