Sunday, January 3, 2016

Stuck in the mud...

As we start 2016, the market is in and has been stuck in a range for the past 3 months. If you go back to the start of 2015, it's been stuck in a similar range for the past year - besides a small downswing in late August that it recovered from. This makes our job hard, as we are not trying to predict what the market will; instead we are trying to follow the trends. If there is no trend, it becomes difficult to make any money trading the indexes.

With that said, one significant event has taken place that may give us a clue of what the next trend will be. The S&P 500 has dipped below its 42 day MA on the weekly chart a few different times since November 13th. It recovered a couple of time to take a peak back above it before falling again. It took another look above this past week before settling below.

As of now, the S&P 500 sits below its weekly 42 MA, below the weekly 10 MA and just slightly above the weekly 18 MA. This should make you think twice before entering in your 401k right now. It should also make you think about exiting if you are still in your 401k. If you do stay in, it would be wise to exit if it drops below the 18 MA.

  • 401K/IRA
    • If still invested, look to get out if the S&P drops below its weekly 18 MA. 
    • If you're in cash then stay on the sidelines and wait for something to develop.
  • Stocks/ETFs
    • Only invest in strong patterns.  Do not forget to have a STOP LIMIT for open positions.

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