The S&P 500 is now at
its lower trend line. If it falls much
further it will signal a change in trend and selling will pick up. Currently, the trend is still up so no panic
yet. The “stall” around 1460 is quite
evident on the chart.
http://finance.yahoo.com/q?s=%5EGSPC
annotated by NTSM
MARKET
RECAP
Monday the S&P 500 was
UP a whisker, but basically unchanged at 1434 (rounded) and VIX FELL 2-1/2% to 16.62.
NTSM
The
NTSM analysis remained HOLD Monday.
If
the S&P 500 significantly breaks the lower trend line, I expect that the
NTSM analysis would switch to sell fairly quickly depending on the action in
Volume and/or VIX. Conversely, if the
S&P 500 moves up from here NTSM will probably turn more positive. There is no chart component in the NTSM
system; that’s just the way the numbers are working.
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 currently have a 50%
stock allocation overall. For my age,
that is what many advisors recommend as a fully invested position, however, I
am normally much more aggressive. I have
less invested in stocks now because there’s a lot of risk.
If
the NTSM system indicates sell, I will move to zero percent invested in stocks. Others may choose to stay partially invested
in stocks without too much damage to their portfolio if the invested % is low. For example, if one were to keep 30% invested
in stocks and the market crashed by 50%, the loss to the portfolio would only
be 15%. If that is your plan, keep the
low-beta stocks (those with lower P/E ratios) such as utilities, or consumer
staples. Sell technology. Keeping 30% invested in stocks hedges the bet
if I am wrong and the market continues up after a sell signal. This is premature, of course. The market may just turn up from here.
