Special Bulletin: January 31st, 2019

“As goes January, so goes the year.” Really? Is it that easy? NO! While that old adage (the January barometer) does have some strong evidence behind it, at best it has only been accurate about 75% of the time since 1945. (Source: Fidelity Active Investor) Still, that’s not too bad. However, if you look a little closer (how about 2018) you find that a super January led to a choppy mid-year and an awful last quarter with the S&P500 losing for the year.

It’s far better to rely on the “math of the market” (the actual internals of the daily price & volume action) to determine which course of action you should take when investing your hard earned cash. This takes the emotion out of it. With apologies to Abraham Lincoln, “You can fool all investors some of the time and some investors all the time, but you cannot fool all investors all the time.” At Triumphant we rely on the math of the market to reveal the “footprints of money”, and it works. The investing decisions of big institutions (the footprints) account for at least 70% of the markets daily activity and influence the direction of the markets trend. Due to their buying, our Current Market Outlook remains “green”.

Our daily, rules-based process of analyzing the internal indicators of the market was not fooled. Late last year our proprietary 3 stage, sell-signal discipline issued a yellow light on October 4th, and then a red light on October 10th. It reiterated the red light on December 17th just before the market tanked. Most recently, our discipline (which mathematically works in reverse at market bottoms) signaled an upgrade to a yellow light on January 5th, and then flashed a green all-clear on January 17th (see below). We have found the math of the market to be objective and worthy of being relied upon.

While the past few weeks have been rewarding for investors who ignored their fears and responded to the markets new bullish signals, some sort of a pullback or cooling off period in February is likely. The “low, rally, retest” sequence mentioned previously is still possible and could start at any time. History has shown that a retest can come as late as 5 months after the original low. That suggests that a negative event could happen between now & late May. If you missed this rally, you may get another chance. Rest assured, we will continue to monitor the markets health and communicate our findings in this post. 

Have a Triumphant day! ®