RALLY OVER
The bear market rally has ended (Elder & Lovvorn)
“Our indicators rallied to much lower tops, and when
the market turned down on Friday, daily bearish divergences triggered. The bear
market is back, and it is likely to challenge the June lows.” Full story at…
That’s possible and we’ll know soon since the S&P 500 is now sitting on its lower trend line. A drop of more than 2-3% would be the signal that it really is over.
Here’s a chart from
Hussman Funds from this week’s Market Commentary. It certainly doesn’t look encouraging. Regular readers know John Hussman, PhD, has
been negative on the market for some time.
http://www.hussmanfunds.com/wmc/wmc120723.htm
MARKET
Monday
the S&P 500 finished down almost 1% to 1351. The VIX was up 14% to 18.62 so the options
boys got concerned and bought a lot of puts (options that make money when the
market goes down).
The
S&P 500 closed on its lower trend line, but once again I was running
errands all day and missed a chance to buy a long trading position. Since I still think the market goes up from
here (for a while at least), I’d like to put some trading money to work on a short-term
bet that the market will go up. I am
only writing about my trading portfolio here and that is less than 10% of my stock
portfolio. I don’t gamble (trade) with
my entire portfolio. Why risk your
future? The “My Invested Position”
paragraph below covers my total portfolio.
If I do take a trading position, I’ll set a tight stop so that if the
market goes down, I’ll get out quickly.
NTSM
The NTSM analysis switched
to HOLD at the close on Monday. VIX
switched to neutral on today’s big run-up.
A few more days like today and the NTSM system will switch back to sell.
It is a weakness of the
NTSM system that quick turnarounds may not be called correctly. So we’ll see.
MY INVESTED POSITION
Based on the BUY signal, 6
July, I moved back into the market on 9 July (after the weekend) at S&P 500
1352. I now have a 50% stock allocation
overall. I am underweight my usual
aggressive allocation for stock because there’s a lot of risk now.
