Saturday, January 9, 2016

Down She Goes

The market took a big hit this week with the S&P 500 losing 5.86%.  Luckily, we were in cash watching everything from the sidelines.  A place we plan to stay this week.

The 42MA, once again, proved to be key in this weeks drop. The prior three weeks, the S&P 500 would sneak above before closing at or below.  This week, it never touched 42MA, which was our first clue we were in for a drop.

The big questions are, will this be the start of something bigger or will we bounce back similar to the past couple of years?  Our plan is to stay out of the stock market until it can close above the 10MA.  We will then reevaluate and possible dip our toes in the water.

If we had to make a prediction, we are expecting the decline to continue all the way to $1850, followed by $1811.  If you're 401k is invested, there's still time to get out.  Don't wait for a bounce, which may or may not come.

  • 401K/IRA
    • If still invested, get out now!
    • If you're in cash then stay on the sidelines and wait for something to develop.
  • Stocks/ETFs
    • Only invest in VERY strong patterns.  Do not forget to have a STOP LIMIT for open positions.

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