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The Triumphant Core Four

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Special Bulletin: Nov 8, 2022 (10:15am Update)


A Higher Low is In! (Gulp!)

As of 10:15am today our Current Market Outlook was upgraded to “Uptrend Under Pressure” with a yellow light (SPX @ 3,820.26) as the S&P 500 held above its 50-day moving average (mav) at yesterday’s close, added gains at today’s open, and then crossed above its 10-day mav just after 10 o’clock this morning. Currently our “Core Four” (see top of page) has 1 green, 1 yellow and 2 red lights. The VIX is also confirming this upgraded signal.

A higher low (an important chart aspect for an advance) is in! … until it isn’t. The only way the market can go lower from here is exactly that – if it goes lower. In other words, if (when) the indexes begin to advance don’t be afraid of that. Don’t fight it. That is what is supposed to happen especially after a bear market has run its course.

For investors and traders alike, it is imperative to always practice risk management. Know when you are wrong and where you will sell to protect capital from the unforeseeable. At the moment, investors have been given what may be seen as some sort of a “gift” from the stock market – a very discernable and reasonable exit. A place to sell (reduce or eliminate portfolio risk) in the event of a black swan or financial Armageddon. That “place” is the two recent lows (turning points) in the main indexes that suggest levels of institutional support; specifically, the low of Oct 13th and the support day lows of Nov 3rd & 4th.

History is on the side of the bulls regarding where the main indexes are one year after a mid-term election, according to David Ryan, IBD Live and others.

To that point, after today’s mid-term election, investors should have more clarity on what to expect “in a business sense” in Washington (read “red tsunami”) for the coming year. From our vantage point, that means perversions and agenda driven lunacies appear on the verge of being soundly refuted and defeated and will be replaced by rational efforts to make America great again. 

Six days ago, in the wake of the Fed’s rate decision we wrote, “There are 3 primary near-term outcomes to monitor from the current technical chart configuration of the S&P 500. The first is clearly a continuation of today’s price weakness and an immediate dive to new lows for the year. The second is an initial move down for a few days that ultimately finds price support at a “higher low” level than the low from Oct 13th, and then rallies from there. The third is where the market moves straight back up by this Friday, overtaking the 21-day and 50-day mav’s (aka: a “positive double cross”) and driving higher than the high of yesterday. If this sort of whipsaw action were to happen, our red signal would be wrong and would quickly return to yellow.” (Note: our red signal has indeed been upgraded to yellow today.)

As of this morning, we see a technical combination of the second and third likely outcomes. (Please note that the first possible outcome did not happen. Are you paying attention to that?) 

The second outcome suggested an initial move down quickly followed by a rally, thereby creating an important technical chart aspect called a “higher low.” Check! 

The third outcome specifically sighted a “positive double-cross” (a very important chart aspect that doesn’t happen that often) move back up and over the 21 & 50-day mavs. Check! (While it did not happen by Friday, it happened on the S&P 500 just one day later – yesterday.)

In that same post (for the sake of the bulls) we added this point concerning institutional selling action: “It will be very important for the market to avoid another Distribution Day tomorrow. That technical fact is deserving of your attention.” Check! (Note: The total volume of shares traded the day after the Fed was lighter than the Fed day total on both the Nasdaq & S&P 500!)

While there is mildly exciting recent action developing in the stock market, we must bear in mind that the Nasdaq’s action is still weak and uninspiring. It will likely take a Fed announcement that they are done hiking rates (for now) to ignite any serious demand in that area. But that will happen at some point in the future – months? Years?

Yellow means proceed with caution. The risks facing the market are still high. For the advance to become more significant, the S&P 500 for example would need to move past its recent high of Nov 1st. If the hoped for “higher low” actually fails, our Core Four would sniff that out quickly and cause our Current Market Outlook to be downgraded early in that sort of move. Stayed tuned!

Game plan: Begin putting limited capital to work in the best ideas from your watch list. This Thursday’s C.P.I. (8:30am ET) will be a market mover – keep that “top of mind.” Know where you are getting out before you even get into a position – practice risk management!

Note: You can learn more about The Triumphant Core Four risk management system by clicking here.

Have a Triumphant day! ® 

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. ©2022 Triumphant Portfolio Management, LLC.

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