NICE BOUNCE

THE TRENDS:  The long term trend remains intact and at first glance of the weekly SPY chart you may be inclined to believe that maybe the intermediate term trend has resumed to the up side.  The week closed very strongly up right after bouncing off the 40 week moving average.  While the price action itself was very bullish there are still two things that I look that are suggesting that this bounce may be nothing more than a brief rally before a resumption of the trend down.  One of those things is the 10 week moving average (cyan line) which is directly above price and often acts as resistance when the market has been declining from a major high.

WHAT I WOULD TO LONG TERM:  I would still be out 100% of mutual funds in my 401-K until I have full confirmation that an intermediate term rally is underway.  Hope you all had a happy Thanksgiving!

STILL OUT

THE TRENDS:  The long term trend remains up but the intermediate term trend remains firmly down.  This week the market closed lower that last week and just as importantly closed lower than both the 10 week moving average (cyan line) and the 40 week moving average (white line).  SEE IMAGE BELOW.

WHAT I WOULD DO LONG TERM:  Four weeks ago I mentioned that I would move all of my money in mutual funds into cash (see arrow on image).  The most recent price action suggests a further move lower.  Until the intermediate term trend flips up, there is no reason I would commit any funds back into mutual funds.  Have a great weekend everyone.

STILL DOWN

THE TRENDS:  While the long term trend remains up, the intermediate term trend remains decidedly down.  For the past couple of weeks I've been talking about the high likelihood of price declining into the 138 - 140 area.  On Monday the market rallied to touch the 10 week moving average but then sold off to close on Friday at 138.16 below the 40 week moving average at 138.61.

 










WHAT I WOULD DO LONG TERM:  There is ABSOLUTELY no reason to buy at this juncture.  I would keep my powder dry and let the market tell me when it's time to put some chips on the table.  Have a great weekend everyone!

THINGS STILL NEGATIVE

THE TRENDS:  The long term trend remains up but the intermediate term trend remains down.  As you can see from the weekly SPY chart, although the week closed slightly higher than last week, it closed lower than where it opened.  More importantly, during the week price rallied to the 10 week moving average and then declined precipitously on Friday.  This is very bearish.

WHAT I WOULD DO LONG TERM:  IMHO there is absolutely no reason to buy yet.  The recent price action suggests a high probability of a further decline to at least the 138.50 to 140 area.  Have a great weekend!