Our Current Market Outlook has changed to “Market in a Correction”. Our traffic light has changed from green to red, skipping yellow altogether. Today the market suffered its worst single day decline since the Brexit in June 2016. As we pointed out in our special bulletin last night, the market was on the verge of issuing a sell signal. That signal; a rare, early “1st stage” sell signal based on a certain specific technical indicator triggering, happened today. In addition, the market slashed through and closed under an important support level on the S&P 500. This action also triggered a “2nd stage” sell signal.
In response to these weakening conditions, today we again raised the level of cash as a holding in our three equity growth strategies and in two of our mutual fund/ETF models during the first half-hour of trading. We also entered into an initial position in an inverse ETF (short S&P) in one of the three equity growth strategies. The uptrend in the market appears to be breaking down with a new correction phase just beginning. We will maintain our defensive posture in our strategies to protect capital unless the market proves we need to do differently by reversing and setting new highs on increased volume.
The markets will likely be volatile in both directions in the weeks ahead. No one knows how long or how deep a market correction may go, but the price and volume action of the major indexes over the next few days will be very telling. If the market is on the verge of selling off hard, it can happen in as little as two to three months, or it can grind lower in a stair-step manner for a year or more.
Stay tuned for future updates and as always, have a Triumphant day!