THE TRENDS: While technically the long term trend remains up, the intermediate term trend has flipped down, which may soon translate into shift down in the long term trend. Take a look at the weekly SPY chart. As you can see the week not only closed lower than last week, but it also closed lower than the previous 5 weeks AND below the all important 10 week moving average. Also, for the 1st time in 5 weeks there are fewer stocks in bullish trends. This is a very important confirming market breadth indicator that I look at. NOTE: From this point forward I'll be posting the weekly chart with price bars colored one of three colors (green, dark red and gray). If the bars are green, the market is bullish. If dark red, the market is bearish. If gray, the market is neutral.
WHAT I WOULD DO LONG TERM: I would be out 100%. The intermediate term trend has flipped down. It is possible that the market may stop and bounce off the 40 week moving average, which is just below price. If that happens, I would get back in again. But right now there is a decent probability that the market may decline even further. Have a HAPPY NEW YEAR!
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