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February was a month to remember. The short-term correction (-10%) that loomed over the market finally arrived in the major averages.  After new highs in January, now there is weakness in the tape appearing more regularly.  Volatility has more than doubled based on the Volatility Index (VIX). There has been a clear loss of momentum in some technical indicators that are starting to appear. Sometimes in the past, a precursor to lower stock prices down the road.

Our U.S. equity timing model remains on its October 31st buy.  This is normally a condition where historically risk has been below average and returns above average.  So far, the correction has been contained. With the latest decline, the short term is oversold from where potential rallies do develop.   However, the intermediate term charts are the opposite, they are overbought, suggesting the likelihood the market could have some difficulty having a substantial rise.

Keep a close eye on the movement in the Russell 2000 Index (IWM), a good measure for the broad market.

Figure: The iShares Russell 2000 Index (IWM) Weekly Price Channel and Upside Objective, and 19-26-9 Week MACD

The iShares Russell 2000 Index ETF (IWM) is made up of companies with a market capitalization of between $300 million and $2 billion.  The Russell 2000 (IWM) portfolio top sector holdings as of 02/21/18, is Financials 17.71%, Technology 16.61%, Health Care 15.13%, Industrials 14.58% and Consumer Cyclicals 12.23.  (Side note): Weekly MACD of Financials (XLF) has just given a fresh sell which is the top sector of the Russell 2000 Index

The top portion of the chart shows the weekly Russell 2000 Index (IWM) peaking at 160.62 on 1/24/18, failing to reach the equidistant channel objective (orange line) at 164.00 (purple circle). The IWM then turned down penetrating the uptrend (green line) that began in February 2016. This was the second time the uptrend was slightly violated, also in August 2017 (pink circles).  After penetrating the uptrend line, both times the IWM reversed higher.  This time could be a different story compared to the August 2017 rise when the IWM was moving sideways, much quieter, and the trading range was only about 1/2% a day.  In this market climate, there is more volatility, intraday swings are between 1 and 2 %.

The lower portion of the chart is MACD, a technical indicator that measures momentum.   MACD is in an overbought condition, momentum weakening, very close to generating a fresh sell signal.   MACD is also threatening to break a two-year-old uptrend that began in January 2016.  Risk is on the rise.

The SPDR S&P 500 (SPY) is also showing warning signs of a loss of momentum for the intermediate term.

Figure: S&P 500 SPDR ETF Weekly Price Channel and upside objective (SPY, top) and 12-26-9 MACD (bottom)

The chart above is the weekly SPDR S&P 500 (SPY) ETF and its weekly (intermediate) price channel (purple lines).   The S&P 500 (SPY) is made up of 500 stocks of the largest companies in the U.S. When you invest in the S&P 500 (SPY), you are getting a broad representation of large-cap U.S stocks with a moderate risk.

The S&P 500 (SPY) advance didn’t quite reach the upper channel objective at 308.00, peaking at 286.79.  During February’s sharp and quick decline, the two-year uptrend was slightly penetrated to the downside.  The SPY reversed sharply off its lows.   However, as of the writing the rally has stalled and a tight trading range between 268.00 and 275.00 has developed.   If the S&P closes below 268.00 the odds would increase a test of the lows is imminent.

MACD is in an overbought condition, very close to generating a sell signal along with breaking an uptrend from January 2016, over two years old.  For now, the benefit of the doubt goes to the bulls.  However, momentum is weakening. risk is on the rise, and caution is recommended

Summing Up:

The easy times are over.  A clear loss of momentum in the market averages has occurred in February.  Some technical damage did occur during the sharp decline in February.  Although the market averages have reversed off their lows, there is a good chance a test of the lows will occur over the next few weeks.  Intra-day volatility is on the rise which adds to risk.  For now, the bulls remain in control.   Even so, if you haven’t already you have a second chance to review your investment portfolio.   Be ready for the potential challenges that may be ahead, and be prepared for the potential opportunities that may arise in months to come.  If you need a second pair of eyes we are here to help you.

I would love to hear from you. Please call me at 516-829-6444 or email at bgortler@signalert.com to share your thoughts or ask me any questions you might have.

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******Article published by Bonnie Gortler in Systems and Forecasts February 23, 2018

Disclaimer: Although the information is made with a sincere effort for accuracy, it is not guaranteed that the information provided is a statement of fact. Nor can we guarantee the results of following any of the recommendations made herein. Readers are encouraged to meet with their own advisors to consider the suitability of investments for their own particular situations and for determination of their own risk levels. Past performance does not guarantee any future results.

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January was a strong month for stocks. The Dow Industrials and the S&P 500 had their best January since the1990’s.  However, the indices have turned lower to end the month.  Investors appear to have stopped buying dips and have turned a bit more cautious. Investor optimism remains high, a contrary indicator.    Intra-day volatility has picked up. It looks like the days of half of one percent intraday ranges on the market indices now are a distant memory. I anticipate the daily trading ranges over the next several months to widen.

A short-term correction looms in the future.  There has been some short-term weakness in the tape, along with a loss of momentum in some technical indicators.  It was somewhat disturbing there were readings this week that showed a clear deterioration in the new 52-week highs and also an expansion of the new 52-week lows on the New York Stock Exchange Index.

On the contrary, a sign for the rally to resume would be for the opposite to take place: the new highs to expand and the new lows to contract to below 50.  The intermediate and long-term price trends on the major averages remain favorable.  Our U.S. equity timing model remains on its October 31st buy, a condition where historically risk has been below average and returns above average.

It’s too early to say the rally has come to an end.

Keep a Close Eye on the Russell 2000 (IWM)

What ETF to watch now for signs of a correction in the near term?  Answer: The Russell 2000

Figure: The iShares Russell 2000 Index (IWM) Weekly Price Channel, Upside Objective Channel, and 19-26-9 Week MACD

The iShares Russell 2000 Index ETF (IWM) is made up of companies with a market capitalization of between $300 million and $2 billion. The Russell 2000 (IWM) portfolio top sector holdings as of 01/30/18, is Financials 17.71%, Information Technology 16.77%, Health Care 16.16%, Industrials 15.22% and Consumer Discretionary 12.43%.  The top sectors in the IWM all started the year strong.

The top portion of the chart shows the weekly IWM made a new record high of 160.62 on 1/24/18.  The IWM has been in an uptrend (green line) since February 2016, with only one violation that lasted for three weeks in August 2017 (pink circle).  The IWM appears to have stalled, before completing its latest upper channel objective at 164.00 (purple circle), unlike the S&P 500 and the Nasdaq, which made higher objectives, not a good sign.  The IWM has been weaker than the other indices as of late.

Over the next several days, watch if the IWM stays above 151.00 keeping the uptrend intact. As of this writing the IWM is 156.69. In addition, if the IWM lags the S&P 500 (SPY), this would be another sign implying further weakness for the IWM that could potentially spill over to other sectors of the market in the near term.  On the other hand, it would be bullish if the Russell 2000 (IWM) index were to stop falling and take out the IWM high at 160.62, and penetrate 164.00 giving higher objectives.

The lower portion of the chart is MACD, a technical indicator that measures momentum. MACD peaked in January 2017, (left purple circle) confirming the price high.  The IWM stayed in a trading range as MACD moved lower until September when MACD turned up.  The rise in MACD has slowed since the initial thrust.  MACD has turned down, (right purple circle) forming a potential negative divergence from last January.  More strength in the IWM is needed in the near term for MACD to make a new momentum high.

Figure: The iShares Russell 2000 Index (IWM) Daily Price Channel, and 12-26-9 Week MACD

The top portion of the chart shows the Daily iShares Russell 2000 Index ETF (IWM).

The IWM has been in a daily uptrend since August 2017.   The short-term trend is in jeopardy to turn negative if the present decline continues. A close below 155.00 for two days will shift the daily trend from up to down suggesting caution near term.

In the lower portion of the chart MACD has given a fresh sell signal showing momentum is clearly weakening.  If the IWM continues to fall, the uptrend will also be broken, suggesting more selling is possible sooner rather than later.

Summing Up:

January has been a stellar month for the market.  In the past few trading sessions volatility has picked up and the tape action has become more unfavorable. Short and intermediate trend lines are intact for now.  However, further weakness would break the uptrends suggesting a short-term correction is possible.  I am watching very carefully the action in the Russell 2000 as it is one of the few indices that didn’t reach its upper channel objective and now has started to turn down.  Hold off on buying into the dip to see if the IWM remains above 155.00 on this pull back which would break the daily uptrend. A break below 151.00 on the IWM would violate the intermediate trend.   For now, continue to give the benefit of the doubt to the bulls. However, if the uptrends are violated more caution is recommended.

I would love to hear from you. Please call me at 516-829-6444 or email at bgortler@signalert.com to share your thoughts or ask me any questions you might have.

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******Article published by Bonnie Gortler in Systems and Forecasts February 1, 2018

Disclaimer: Although the information is made with a sincere effort for accuracy, it is not guaranteed that the information provided is a statement of fact. Nor can we guarantee the results of following any of the recommendations made herein. Readers are encouraged to meet with their own advisors to consider the suitability of investments for their own particular situations and for determination of their own risk levels. Past performance does not guarantee any future results.

 

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The stock market has had an explosive start in January with the S&P 500 (SPY) and the Nasdaq 100 (QQQ) completing their upside objectives at 276.00 and 164.00 respectively. These are now levels of support if the market were to decline.

What to Watch Now For Direction?

SPDR S&P Financial Select SPDR ETF (XLF) Daily Price (Top), and MACD 19-26-9 (Bottom)

The top part of the chart shows the daily Financial Sector SPDR (XLF), an exchange traded-fund (ETF) that tracks a mix of diversified financial service firms, insurance, banks, capital markets, consumer finance and thrift companies. As of 01/217/18, the top holdings of XLF are Berkshire Hathaway B, (BRK.b) 11.50%, JP Morgan Chase & Co (JPM) 11.07%, Bank of America Corp (BAC) 8.61%, Wells Fargo & Co (WFC) 7.87%, and Citigroup Inc. (C), 5.79%. When financials are strong the S&P 500 (SPY) also tends to do well because the S&P 500 index has 14.85% of its holdings in the financial sector, second in weight only to the technology sector (at 23.96% as of 01/16/18).

Financial stocks made a low in September of 2017 and then stalled at the middle channel before breaking out in November 2017. The XLF then went sideways holding the middle channel.  In the start of 2018 the XLF has come to life, up 5.41% outperforming the S&P 500 (SPY), (as of 01/17/18), a bullish sign.  Historically, it’s a sign of a healthy market when financial stocks are strong; showing signs there is economic growth.  The daily upside target is 30.50, now only 3.6% away. Support is at 27.50.

The bottom half of the chart is MACD (12, 26, 9) a technical indicator that measures momentum.  MACD is rising, a positive sign. Keep an eye out for a potential break in the uptrend in MACD (green line).   An MACD turndown now would not favorable because MACD would fail to confirm the price high and instead would form a negative divergence.  This would be a warning the rally could be running out of steam.

The good news is the uptrend in MACD remains intact, and if the rise in MACD continues then MACD will confirm the XLF high.  A break above 30.50 on a closing basis would give higher upside targets to 33.50 coinciding with the weekly upside objective.  (See chart below).

SPDR S&P Financial Select SPDR ETF (XLF) Weekly Price (Top), and MACD 19-26-9 (Bottom)

The top part of the chart shows the weekly Financial Sector SPDR (XLF). The XLF has been in a steady intermediate uptrend since 2016.  The upside objective is 33.50, 13.9% higher from today’s close at 29.41.  Support is at 23.50.  MACD in the lower portion of the chart is still rising and its uptrend also remains in effect.  Therefore, the likelihood is for the XLF to continue to rise.

Just to Sum Up:

Stocks have started 2018 with a bang. Our U.S. equity timing model remains on its October 31st buy, a condition where historically risk has been below average and returns above average. The financial sector has been one of the leaders of the advance, which is a sign of a healthy market.  If the XLF closes above 30.50 then the next higher upside target would be 33.50.    As long as the XLF stays above 27.50 further gains in the financial sector are likely.

I would love to hear from you. Please call me at 516-829-6444 or email at bgortler@signalert.com to share your thoughts or ask me any questions you might have.


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*******Article published by Bonnie Gortler in Systems and Forecasts January 18, 2018

Disclaimer: Although the information is made with a sincere effort for accuracy, it is not guaranteed that the information provided is a statement of fact. Nor can we guarantee the results of following any of the recommendations made herein. Readers are encouraged to meet with their own advisors to consider the suitability of investments for their own particular situations and for determination of their own risk levels. Past performance does not guarantee any future results.

 

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Many have made wealth building one of their resolutions for the New Year, and for good reason, the stock market is in the midst of one of the best starts in history. There is certainly much excitement surrounding the stock market right now, and if you are invested you are probably also feeling good that you are making money due to the market moving to the upside. As any experienced investor knows, times like these can change quickly. Tell me, will you be ready if and when the market begins to fall or when the market feels like a roller coaster ride begins again? It may begin later than sooner but you’d be wise to start right now in planning with a watchful eye so you are prepared to take action when the ride becomes bumpy.

To be ahead of any change in the market you want to keep a level head. When challenging times arrive it’s important to your success to learn how to manage your emotions within the ebb and flow of investing. It’s only natural to become excited about the current state of the market but a wise investor knows that wealth and well-being go together. If you adopt this mindset throughout your wealth journey you will be more than ready for any adversity when challenging times occur. Staying calm with a spirit of balance can help you overcome any situation because you are approaching the ups and downs calmly and with a positive attitude instead of the feeling of anxiousness or overwhelmed by circumstances you have no control over. Keeping your emotional self together in a calm manner can make all the difference when seeking to make intelligent investment decisions.

Wouldn’t you like to feel great and to live a life without fear and anxiety? Emotions range from one end of the spectrum to the other and it’s quite easy to get lost in them if you aren’t aware of how yours impact your life. New Year’s resolutions are wonderful but taking care of mental and emotional health is important every day of the year. Building your wealth will require a systematic approach. What I’ve done within my own journey is to add a simple checklist in different areas of my life to help raise my awareness for what changes I need to make so that I continue improving when those anxious moments creep in. I’ve found just in the past few weeks that these moments have become shorter and shorter and the list has actually helped me increase my life balance and inner peace faster.

There are other steps you can take that will help you in gaining more inner peace you are seeking. You can also feel better by including daily rituals into your life. I have daily rituals I follow, such as journaling, working out, and listening to music.  So, how do you start?  Picture your ideal self, and then break down the steps needed to get from where you are now to that ideal person you picture. You want to stay realistic and create a plan that will help push through each step and through days of overwhelm without stress. Don’t make things more complicated than they need to be or you may find yourself not sticking with your plan. You want to approach each of your goals in a manner that will empower you.

When it comes to your wealth journey, you will want to view your finances in a way that doesn’t cause stress or anxiety and will allow you to map out a plan that works with your vision not against it. If you approach your plan in this manner you will place yourself in a position of strength and become able to make difficult decisions easier; which, in turn, will increase your ability to handle any change within the investment climate in a calm strategic manner thus moving even closer to your investment goals. This ideal may seem out of reach at times but stick with it. A well thought out investment plan along with good investment habits and a strong money mindset will be the tools you need in order to meet challenges without stress, frustration, and overwhelm. The feeling of more inner peace will be well worth all of your effort.

Nothing is beyond your reach when learning to shift your money mindset. First, learn to focus on what makes you feel good and help keep your spirits up for doing so will keep you from feeling uncomfortable or confused. When you are relaxed and confident you are in the flow and can’t help but feel good especially when you remember that you can accomplish anything you set your mind to.

I thought it would be good to share some of my thoughts and a few investment tips on how to handle a stormy stock market environment when large up and down swings so you can keep avoiding that feeling of being out of balance.

A great place to start is to become informed about your investments. Where do you get your financial updates? Are you confident that your current investment strategy will do well when the stock market is not rising?  By reviewing your portfolio now, you can be more comfortable with your investment holdings and avoid unnecessary stress. Now is not the time to walk away and hide. Now is the time to take a sincere interest in what is happening so you can make informed decisions about what needs to change.

If you oversee your own investments then you want to have an investment strategy in place that will meet your needs over time. Begin with a diversified portfolio that suits your needs within a time frame that will help you meet your goals and objectives.

A good investment strategy also starts with a clearly defined objective. Your strategy needs to be flexible and allows you the ability to exit quickly in order to reduce your exposure if the stock market starts to fall.  Lock in some of your profits. You never go broke taking a profit.

You also could seek the personalized advice of an investment professional to answer your specific questions one-on-one.  What is the review process that you have in place for your investment portfolio?  Do you have a strategy to manage risk? You can review your portfolio or have a professional do this for you.  Simple changes in your current portfolio can help you cut your risk and increase the potential return.

Below are some investment tips to start you on the right path for building wealth.

11 Simple Investment Tips To Increase Your Investment Success

  1. Be willing to invest in you for your well-being and inner peace. Work on you as part of your everyday life and reap the benefits.
  2. Track your investments to see how they are performing on your phone or the internet. One of my favorite free resources is Yahoo (yahoo.com). If you have an iPhone download the application “Stocks”. You can follow the market activity easily, your favorite ETFs, stocks and mutual funds to see how much they are rising or falling.
  3. Diversify your investments that include a broad mix of stocks and bonds. As you grow older it’s a good idea to move your assets into less-risky investments. A quick rule of thumb is to have an allocation to bonds that is equal to your age.
  4. Don’t let one investment make or break your investment account. Something you didn’t expect could occur at any time.
  5. Make your investment decisions with the current trend of the market. Your risk is larger when you go against the trend. If you do, don’t marry your investment. Get in and get out quickly.
  6. Have a flexible portfolio that is liquid. Keep your entire portfolio in mind when making changes in your investment portfolio.
  7. Manage Your Risk. Know in advance how much risk that you are willing to take.
  8. Have a plan to protect your winning investments. With a simple exit strategy of raising your exit point as your stock moves higher, you will let your profits run.
  9. Avoid big losses to achieve consistent gains.  Cut your losses quickly so they don’t get out of control. Make it a priority to protect your investments before they move too far against you.
  10. Don’t get into the mentality of not wanting to take a loss. It takes 100% profit to cover a 50% loss.
  11. Review your investment portfolio to see if any individual stock, an exchange-traded fund (ETF), or bond position exceeds 5% of your overall portfolio. If it’s not performing, or it’s too volatile consider reducing at least part of your investment.

Start using just a few of these tips now, and see how your perception about money starts to change. Make it a practice to spend some time watching your money so that you will be prepared for changes that occur and you are ready for potential decisions that may arise so you are able to make those informed decisions with a calm spirit. Even small changes in your portfolio can have a positive impact. When you take care of your inner well-being your ability to handle the ups and downs of the market will become easier over time. Changes don’t have to be all at once and can easily be broken down into even smaller tasks over time. If you find that you are still feeling a bit unsure of your path to wealth, remember you can step away and get some help to guide you through the process. Stop hiding or avoiding talking about money. You don’t have to feel stressed or overwhelmed by it, you truly can build your wealth with confidence and inner peace.  Decide today that NOW is the time to feel good about money. I’m here to help you on your journey to wealth.

If you like this article you will love my free ebook Grow Your Wealth and Well-Being.

 

 

 

 

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The Dow, S&P 500 and Nasdaq completed its best year since 2013.  Many global markets broke out from long-term down-trends igniting interest among investors, achieving gains of over 20%. In addition, 2017 was one of the least volatile years I have witnessed in my over 35-year career.   Technical indicators have confirmed the highs made in the major averages, and uptrends remain in effect.

The question remains can the rally continue in 2018?

The probabilities are high that further gains are likely.  Our models indicate a positive market climate for the start of 2018.  The bulls remain in control for now.  However, optimism is at extreme levels, (a contrary indicator), investor’s cash is at levels that are the lowest since 2000, and interest rates are rising.

The Moment of Truth for the S&P 500 (SPY): Intermediate upside objectives are close to being met.

The SPDR S&P 500 (SPY) Weekly Price And Channel

The S&P 500 (SPY) is comprised of 500 stocks of the largest companies in the U.S. When you invest in the S&P 500 (SPY), you are getting a broad representation of large-cap U.S stocks with moderate risk.

The top portion of the chart is the weekly (intermediate) SPDR S&P 500 (SPY) ETF and its price channel (purple lines).  The upside channel objective is 276.00 (orange line).  The S&P 500 (SPY) has been in a weekly uptrend since February 2016 (black line), with only a minor penetration.

Until the upside trendline on the S&P 500 (SPY) is broken, where the SPY breaks below 256.00 on a weekly close, no serious threat of a major decline is likely.

The SPY declines in 2017 were less than 3%, much lower than normal. In 2018 look for declines to be larger as volatility picks up and investors decide to lock in some of their profits.

Notice how the SPY is very close to its upside objective. If penetrated it would be bullish and suggest the rally can go significantly higher.   A turn down in the near term without reaching the channel objective at 276.00 would suggest the SPY is ready to pause and potentially pullback to support at 244.00.

The lower portion of the chart is the 12-26-9 MACD, a measure of momentum.   MACD is rising and has confirmed the recent price high made by the S&P 500 (SPY), (orange circle), suggesting the final top has not been reached.   MACD is showing strength instead of weakening momentum.

Summing Up:

Stocks continue their advance to start 2018 after completing its best year since 2013.     There is no serious threat of a major decline unless the S&P 500 (SPY) intermediate uptrend is violated.  Watch for a shift in trend if the SPY breaks below 256.00 on a weekly close.  For now, continue to celebrate and enjoy the ride as the bulls remain in control and the bears remain in hibernation.

I would love to hear from you.  Please call me at 516-829-6444 or email at bgortler@signalert.com to share your thoughts or ask me any questions you might have.

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*******Article published by Bonnie Gortler in Systems and Forecasts January 05, 2018

 

Disclaimer: Although the information is made with a sincere effort for accuracy, it is not guaranteed that the information provided is a statement of fact. Nor can we guarantee the results of following any of the recommendations made herein. Readers are encouraged to meet with their own advisors to consider the suitability of investments for their own particular situations and for determination of their own risk levels. Past performance does not guarantee any future results.

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Who would have thought the major average averages would be in a steady uptrend since late August?  There has been no decline of more than 3% on the S&P 500 index as the market climbs the wall of worry to record highs. Short term price uptrends and support levels remain intact in the major averages.

The Russell 2000 (IWM) has been in a consolidating pattern since October 4. Several times the IWM has tried to break out to the upside.  However, it’s a bit worrisome the latest rally attempt failed this week. Also a point of concern, investor sentiment is showing very high optimism. In the past, at these levels short-term declines have started.  On the other hand, the Volatility Index (VIX) that measures fear is near its lows, a positive sign, and favorable seasonality has begun.

Watch the Movement of Small Caps Closely

Weakness in the Russell 2000 (IWM) or sudden weakness in Technology stocks (QQQ) would be a sign a short term pullback is likely.  A bullish sign would be if the Russell 2000 (IWM) index were to stop its present decline, reverse and take out the highs made on November 1.  In addition, if the Russell 2000 (IWM) could outperform the S&P 500 (SPY), new 52-week highs begin to expand, and volume increases on up days, while new 52-week lows contract, this would be positive for the market.

The iShares Russell 2000 Index (IWM) Weekly Price Channel, Upside Objective Channel, and 19-26-9 Week MACD

The top portion of the chart shows the weekly iShares Russell 2000 Index ETF (IWM) which is made up of companies with a market capitalization of between $300 million and $2 billion. The IWM made a high of 150.68 on 10/09/17, breaking out above its upper channel.  A consolidation followed with the IWM confined in a tight trading range, but has since turned down.  Even so, IWM is holding above an important support area.

The good news is during the short-term decline, the IWM remains above the weekly uptrend (pink line) while the other major averages are holding their ground.

The lower portion of the chart is MACD, a technical indicator that measures momentum. MACD peaked in January 2017, confirming the price high. The MACD sell turned out to be premature. The IWM consolidated while MACD weakened but didn’t get oversold, and go below 0. In September MACD turned up, broke the down trend (black line) not confirming the October high, and is now starting to roll over, showing a sign of a loss of momentum.  It’s a little early to know if MACD will continue to decline or if MACD will turn up and have enough strength to make a new momentum high.

The Russell 2000 (IWM) support is at 143.00. Resistance is at the old highs at 150.68 with an upside objective of 162.00.

Summing Up:

With our models in the most favorable condition and favorable seasonality, I am looking for the short term decline in the IWM to reverse and at least challenge the old highs at 150.69 and potentially reach the upper channel at 162.00.  If the IWM were to close below the lows made on 08/18/17 at 134.12 (circled in orange), this would negate my bullish view.

Intermediate Uptrend Continues In Technology Despite Slowdown in Momentum

 

PowerShares QQQ ETF (Nasdaq 100 Index) Weekly Price and Trend Channels (Top), and MACD 12-26-9 (Bottom)

The top part of the chart shows the weekly Power Shares 100 (QQQ), an exchange-traded fund based on the Nasdaq 100 Index, and its operative trend channel (purple line).

The QQQ includes 100 of the largest domestic and international nonfinancial companies listed on the Nasdaq stock market based on market capitalization.  As of 11/7/17, Apple, (AAPL) is the largest holding comprising 12.47%, Microsoft Corp (MSFT) 8.96%, Amazon.com, Inc. (AMZN) 7.45%, Facebook, Inc. Class A (FB) 5.90%, Alphabet Inc. Class C (GOOG) 4.96%, and Alphabet Inc. Class A (GOOGL), 4.33 % totaling 44.07%.

The QQQ breached the middle channel after a 9-week consolidation (red circle) on 04/24/17 and continues to make new highs with only small pullbacks along the way.  The intermediate price trend remains up as long as the QQQ is above its uptrend line (orange).  Support is at 145.00 and the upside channel objective at 162.00.  If the QQQ falls below 145.00, on a weekly close, (an unlikely event), this would change the intermediate trend from up to down, implying weakness potentially to the lower channel at 116.00.

The bottom half of the chart is MACD (12, 26, 9), a measure of momentum. There has been no MACD confirmation of the highs made in QQQ as it did in June.  However, it is a positive sign MACD has turned up, after the negative divergence in MACD (green circles) and the uptrend is broken. I recommend keeping an eye on the top holdings in the QQQ over the next several weeks for an advanced warning of a trend change.

In Sum:

Technology continues to be in favor, outperforming the S&P 500.  As long as the QQQ is above 145.00 on a weekly close (orange line), more gains are likely toward the upper channel objective at 162.00.  Our models are positive and price uptrends are intact so there is a good reason to expect a year-end rally. Be aware of a short term decline to start if small caps remain weaker than the S&P 500, the top holdings in the QQQ begin to falter, and the uptrends are violated.  However, the trend is your friend.  Continue to enjoy the ride.

I would love to hear from you. Please call me at 516-829-6444 or email at bgortler@signalert.com to share your thoughts or ask me any questions you might have.

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*******Article published by Bonnie Gortler in Systems and Forecasts November 9, 2017

Disclaimer: Although the information is made with a sincere effort for accuracy, it is not guaranteed that the information provided is a statement of fact. Nor can we guarantee the results of following any of the recommendations made herein. Readers are encouraged to meet with their own advisors to consider the suitability of investments for their own particular situations and for determination of their own risk levels. Past performance does not guarantee any future results.

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Historically September has not been favorable for stocks, with the S&P 500 declining a majority of the time. But surprisingly this September the major averages are near or at new highs, positive for the month. The major averages didn’t give up much ground after the Fed meeting and political concerns overseas.  The Federal Reserve left interest rates unchanged but implied they would increase interest rates one more time by year-end, despite low inflation. There was a noticeable shift that took place as investors took profits rotating out of some of the leading sectors this year such as Technology and Utilities, and moved into sectors that were lagging.  Energy, Industrials, and Financials were the big winners.

The bullish case remains for the overall market. Our equity timing models remain overall on a “hold” suggesting further gains are likely with risk contained.   The advance decline line of the New York Stock Exchange Index and Transportation average has confirmed the major average highs suggesting a market top is unlikely.  The iShares Russell 2000 Index (IWM) ETF is trending higher leading the advance, a healthy sign for the market. However, there are some sectors showing a loss of upside momentum, which means stock and sector selection will be more important going into the fourth quarter and early next year.

 Health Care (XLV), a leader so far this year might have hit its peak.

  Figure: Health Care Select Sector SPDR ETF (XLV, top and MACD 12-26-9 (bottom)

The top portion of the chart above is the weekly Health Care SPDR (XLV) that is comprised of companies from industry groups including pharmaceuticals; health care providers & services; health care equipment & supplies; biotechnology; life sciences tools & services; and health care technology.  As of 09/25/17, the top 5 holdings in the XLV were Johnson and Johnson (JNJ) 11.26%, Pfizer (PFE) 6.78%, United Health Group (UNH) 5.98%, Merck (MRK) 5.70%, and AbbVie Inc. (ABBV) 4.41%, totaling 34.13%. Except for a few short term declines, Healthcare (XLV) in 2017 has trended higher and is up 18.00% through 09/26/17, outperforming the S&P 500.

The biggest holding, Johnson and Johnson (JNJ) has been trending down. MACD is on a sell along with a bearish negative divergence. JNJ has broken its uptrend from January 2017 (chart not shown).

Notice in the top chart, how the XLV made a new high in July, breaking through its old high, but stalled immediately.   A few weeks later the XLV pulled back to 77.82 (red circle) successfully testing its breakout then rising for three weeks to make a new high at 83.41.  It’s encouraging the XLV uptrend remains in effect from February 2017.  However, in the last two weeks, investors have shifted away from healthcare and some short term selling pressure has begun.

The bottom half of the chart shows MACD, a measure of momentum.  MACD is on a sell and the MACD pattern is suggesting a possible peak for the short term in healthcare (XLV).  MACD is above 0, rolling over with a double top, forming a negative divergence (a higher high in price but a lower high in MACD, (green circles).

The moment of truth is here. There are two significant uptrend lines in jeopardy if the XLV continues to decline.  The uptrend from 02/08/17 would be broken (pink line) on any further weakness. However, the longer term uptrend in MACD from 12/5/16 remains intact (orange line).

In Sum: Healthcare has had a substantial rise.  Declining momentum patterns are appearing signaling some weakness might lie ahead. Keep an eye if the XLV breaks below support at 77.82 on a weekly close.  Now is not a good time to be over invested in health care.  Caution is warranted, the party could be coming to an end soon.

More evidence: A potential shift away from Health Care (XLV) in the short term.

Figure: Daily (XLV) / (SPY) Ratio (Top); MACD of XLV/SPY Ratio (Bottom)

The chart above is the daily Health Care Select Sector SPDR ETF/ S&P 500 ratio XLV/SPY.  A rising line means the XLV is stronger, and if falling, the S&P 500 is stronger.  The XLV/SPY ratio has been in an uptrend since January 2017.  Since the peak on September 8, 2017, the XLV/SPY ratio has turned down, giving a warning of deteriorating momentum in comparison to the S&P 500 (SPY). The uptrend was broken today.

The bottom half of the chart shows the 12-26-9 MACD, on the XLV/SPY ratio. MACD recently generated a sell, turning down from an overbought condition.  Notice the negative divergence in the MACD pattern.  MACD formed a lower high than the peak in June (green circles) while the XLV/SPY ratio in the top chart made a high, (red circles) suggesting a shift in trend has started and more weakness in XLV is expected compared to S&P 500.

I am recommending you review your holdings, making sure you are not over weight in health care.

Summing Up:

The stock market advance continued through September, one of the weakest months historically. Investors appear to be rotating out of some of the leading sectors starting with Nasdaq early in September.  Health care, (XLV)  one of the strongest sectors of the market this year, is giving warning signals of weakening momentum compared to the S&P 500 (SPY),  suggesting it too might hit a bump in the road.  I recommend reviewing your portfolio and reducing your healthcare exposure.  If Healthcare (XLV) breaks below 77.82, on a weekly close this would trigger further selling.

I would love to hear from you. Please call me at 516-829-6444 or email at bgortler@signalert.com to share your thoughts or ask me any questions you might have.

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*******Article published by Bonnie Gortler in Systems and Forecasts September 28, 2017

Disclaimer: Although the information is made with a sincere effort for accuracy, it is not guaranteed that the information provided is a statement of fact. Nor can we guarantee the results of following any of the recommendations made herein. Readers are encouraged to meet with their own advisors to consider the suitability of investments for their own particular situations and for determination of their own risk levels. Past performance does not guarantee any future results.

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The bears were unable to take control through the ups and downs during July and August. Normally a weak market period, the averages had a modest pullback, holding above key support levels and working off their daily overbought condition.   After the short decline without much price fluctuation, the major averages formed favorable technical patterns on a daily basis  from oversold conditions. The bulls stepped in to buy and the bears were disappointed once again.  At the time of this writing, we remain in a rally phase that began in the end of August. The Dow, S&P 500, and Nasdaq made new record closing highs on September 12.  

Price trends seem to be more significant indicating market direction than weakening momentum patterns.  The recent rise occurred even thought there were clear negative patterns on many intermediate charts.  It’s good to keep in mind, there has been not been a bear market since March 2009, when the past bear market ended.  The rise in equities since then is one of the longest time periods without at least a 20 percent drop in the S&P 500.

On this latest rally there has been no big thrust in volume or surge in market breadth to suggest a strong up move is forthcoming.  However, there has been no major sign of danger either.  Our models remain overall neutral-positive for the intermediate term which means upside potential remains greater than downside risk.  Weakening momentum patterns remain on the intermediate charts and still need to be monitored.  However, until support levels and uptrends are broken look for higher prices ahead.

These clues will help guide you if the market will continue to advance or weaken.

7 Simple Clues You Want To Follow For a Potential Trend Change

  1. Overseas markets have been strong. Observe the action to see if overseas markets continue to rise or begin to stall and work their way lower. Watch Emerging Markets (EEM), China (FXI) and Europe (IEV) as benchmarks.
  2. Follow the Nasdaq 100 (QQQ) if it continues to make new highs or turns down. Keep an eye on Apple (APPL), Microsoft (MSFT), Amazon (AMZN), Alphabet Inc Class A (GOOGL), and Facebook, (FB) if they start to lag and start to turn down.
  3. High Yield Bonds weaken, turning lower instead of holding their ground or rising. Use the ETF’s HYG or JNK as a benchmark.
  4. The Transportation Average (IYT) has not yet confirmed the Dow Industrials high. If the IYT turns down now and doesn’t close above 175.40 this would not be a good sign.
  5. Volatility remains low. Watch if VIX takes out the August 11 high of 17.28. A warning signal would be if VIX goes above the high made on September 5 at 14.06.
  6. New 52 week lows on the New York Stock Exchange Index are low, presently at 8. An increase to over 150 would not be a good sign.
  7. Watch the last hour of trading. If the major averages closes near the low end of their daily range instead of near the highs, this would be bearish.

 

Keep an eye on the S&P 500 (SPY) For a Breakout

 

The SPDR S&P 500 (SPY) Daily Price Channel and 19-26-9 MACD

The top part of the chart is the SPDR S&P 500 (SPY) ETF and its active daily trading channel.  The S&P 500 Index (SPY) is comprised of 500 stocks of the largest companies in the U.S.   The S&P 500 (SPY) this week made a new all-time high.  The new high coincides with hitting the daily upside channel.  Further strength in the SPY now, will give a new short term channel objective to 259.00, another 3.6% higher.  A break below 239.00 on a closing basis would raise a red flag.

The lower portion of the chart is the 12-26-9 MACD, a measure of momentum.   MACD is on a buy since late August.  MACD is above 0, rising and its pattern has room to the upside before it would be considered extended.  MACD broke its daily down trend from its March 1 peak.

Higher Intermediate Term Upside Objectives For the S&P 500 (SPY)

 

 

 The SPDR S&P 500 (SPY) Weekly Price Channel and 12-26-9 MACD

The top part of the chart is the SPDR S&P 500 (SPY) ETF and its active weekly (intermediate) trading channel. The SPY has had a slow and steady rise this year.  The SPY chart pattern has been in a consolidating pattern, with an upside bias.  The SPY remains clearly in an uptrend (black line).  There has not been even a minor downside penetration of the trendline since the lows were made on 2/8/16.   Declines have been small and for relatively short periods of time. Until this trendline is broken, no serious threat of a major decline should occur.   The upside channel objective is 277.00. Below 239.00 implies more weakness towards the middle channel at 212.00.

Summing Up:

The major averages have made new highs.  However, keep in mind intermediate momentum patterns have not confirmed the recent highs.  The market breadth and volume indicators that we follow have not been strong enough to generate any impulse signals that suggest the rally is sustainable and would be stronger than an average market rise.  There has been no real thrust on the advancing days to get excited about, however not much ground has been given up either.  Our stock market timing models remain neutral-positive, indicating a potentially profitable market climate and potential further gains over the next several weeks to months.

As long as the SPY remains above 239.00, the trend is up and the odds favor the SPY to work its way higher towards the upside channel objective at 277.00.  If the SPY falls below 239.00 on a weekly close, then risk would increase, and the intermediate trend would change from up to down implying more potential weakness towards the middle channel at 212.00.  Ride the trend for now. However, watch for the 7 clues for a potential trend change.

I would love to hear from you. Please call me at 516-829-6444 or email at bgortler@signalert.com to share your thoughts or ask me any questions you might have.

*******Article published by Bonnie Gortler in Systems and Forecasts September 15, 2017

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Disclaimer: Although the information is made with a sincere effort for accuracy, it is not guaranteed that the information provided is a statement of fact. Nor can we guarantee the results of following any of the recommendations made herein. Readers are encouraged to meet with their own advisors to consider the suitability of investments for their own particular situations and for determination of their own risk levels. Past performance does not guarantee any future results.

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For most people, holding down a job and earning a paycheck is their main strategy for achieving financial security. This alone will not get you where you want to go. Isn’t it time for you to create the lifestyle you want and deserve? What actions are you taking to help you grow your wealth? Do you have a system in place to move you closer to your goals? The answers may not be clear. However, in order to live the lifestyle, you’ve dreamed about, you will need to have a plan to turn your income into wealth. The type of wealth that keeps building if you find yourself out of a job or physically unable to work. The type of wealth is what turns dreams into reality.

Wouldn’t it be great if you were able to stop beating yourself up over those past experiences that have held you back from achieving your financial goals or kept you from doing more of what you love to do each day? Guilt and regret are powerful emotions which can hamper your ability to make the powerful decisions needed in order to create the life you’ve dreamed of.

. Changes with less stress and strain because they are made over time and do not have to happen all at once.

 Whether you’re under 20, in your mid 40’s, or over 65, it’s possible to make life changes for the better that involve money. You ideally can start today with small adjustments that will make a big difference for your future. Changes so you will ultimately enjoy getting out of bed so you can do what you love to do and then finish the day sleeping peacefully instead of worried about your finances.

How can you make this happen? Well, I’m glad you asked…

The first step is to decide NOW (not tomorrow, next week, or next year) your financial security is a priority.  The next step is changing your mindset from seeing yourself only working for your money and shifting to the understanding it’s important now your money will need to work for you. How? This will be done by investing in the stock market. 

It may have crossed your mind and you now wonder if you’d be taking a chance with your hard earned money by investing in the stock market. Keep in mind that although stocks are riskier than keeping money in a savings account or Certificate of Deposit (CD’s) with a fixed yield, they have historically had higher returns that beat inflation helping you grow your wealth. That’s great news for you because it opens the door of opportunity for you to generate an additional source of income. Again, your money will be working for you.

It’s also important to note that I’m not suggesting you should jump all in. The idea is to start slow and small. I want you to be successful with your finances but I also want you to understand this shift in thinking requires you to take steps that may take you out of your comfort zone. This is why it’s important to make small adjustments because as you grow with your knowledge and experience you will find those decisions will ultimately pay off with feelings of ease and satisfaction.

One of the best strategies I’ve seen through my years of experience is to begin your financial plan with long and short term goal oriented action steps that are fun, simple, and practical for you. Simply put, these goals fit you and your life. You are not at a loss with this type of approach because as your skills improve, your comfort level and confidence will develop and continue to grow as well. Making adjustments as needed will also help your success. Start using a few of these tips now, and see how they will support you to grow your wealth. Please feel free to share your experiences.

9 Practical Financial Rituals for Growing Your Wealth

  1. Diversify your investments into a broad mix of stocks and bonds. Don’t put all 100 percent of your money in stocks. Use mutual funds which lets you own a mix of stocks or bonds in a portfolio to manage your risk. Investing in mutual funds that diversify with a group of stocks or bonds is much safer than putting all your money into one or two stocks or bonds.
  2. Review your investment asset allocation periodically. Start saving and investing as early as you can. Create a plan you will follow. Small sums of money add up over time.
  3. As you grow older it’s a good idea to move your assets into less-risky investments. A quick rule of thumb is to have an allocation to bonds that is equal to your age. When the market climate is positive, you could increase your allocation to have a little more equity, however, have an exit strategy for when the trend changes.
  4. Track your investments costs. High trading costs eat into your gains over time.
  5. Keep control of your emotions when investing. The stock market can go up and down very quickly.  Know your time horizon for investing whether it’s for 1 year or less, 5, 10, or 20 years or more.
  6. Don’t have more money invested than you are comfortable with. Its ok to reduce your invested position in small increments. If you are worried and not sleeping at night, you are too invested. Manage your risk. Avoid taking large losses on your investments. Remember small losses are the best losses you can have.
  7. Don’t be afraid to talk about our finances. Don’t hide from the conversation. If you are feeling a bit unsure, look for some help from a coach, investment adviser, or a financial planner who could help you create changes to support you on your journey to wealth.
  8. Take advantage to contribute into a retirement savings plan if offered by your employer. Start with a few percent of your income and then increase the contribution to 10%.
  9. If you need to withdraw money to live on because you are not working, see if you can limit yourself to withdrawing 4 percent or less a year. In this way, you will preserve your capital for later years in life so you don’t run out of money. 

Financial security is important. Take responsibility for your money by developing practical financial rituals that will create a lifestyle you want and deserve. Your plan doesn’t have to be hard or disruptive to your everyday life. Start your plan now and fulfill your hopes, dreams, and goals growing your wealth.

 

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Equity market overview – The bulls remain in control for now

The stock market continues its winning ways.  In 2017, any decline that has occurred has been contained to only a few percent because the bulls quickly stepped in to buy and the market rebounded.   Major averages are at or near their all-time highs.  The New York Stock Exchange Index cumulative advance decline line has likewise made a new all-time high.  Overseas markets are rising, especially emerging markets.  The transportation average recently confirmed the Dow Jones high.  (However, the Transports have pulled back this week.  The significance of this divergence from the Industrials is unclear at this early stage.)  VIX, a measure of fear, is at 9.79 on 07/18/17, historically a very low level.   All of these factors are supporting our market.   At this time only a few warning signs exist, such as unfavorable seasonality and some weakening momentum patterns appearing on some of the intermediate and long term charts.

The positives far outweigh the few warning signs that don’t seem to be deterring the bulls from moving the market higher. There is no evidence of a change in the prevailing uptrend.  Our U.S. equity models remain overall neutral-bullish suggesting higher prices are likely over the next several months.  Any pullback, if it were to occur is likely to be contained, rather than a larger decline of more than 20%.

ETF Corner

Let’s turn now away from US equities to review the position of Gold (GLD) since my article in the June 8, 2017 Systems and Forecasts newsletter “Gold Appears Ready to Shine”.   As a reminder, you can trade gold bullion with the SPDR Gold Shares ETF (GLD).  Purchasing the ETF (GLD) is an easy way to participate without holding the physical commodity.   GLD tends to be trendy, once it establishes its direction.

The top portion of the GLD chart above shows the weekly active trend channel in effect (blue lines).

Gold (GLD) bottomed at 107.00 on 12/15/16.  GLD penetrated the high on 04/17/17 at 123.07, slightly breaking the downtrend from its peak (orange line) on 07/05/16 , which appeared to be a breakout at the time. Instead, the breakout was false as GLD stalled at the middle channel, not powering through.    GLD fell for five weeks to a low of 114.80 then turned up, holding well above the lower channel at 111.00 and above the low at 114.80.  If GLD closes above the high at 123.07 (green circle) this time, GLD would likely be a true breakout. The potential upside target is 139.00.   A close below the lower channel support at 111.00 would negate my bullish outlook.

The lower portion of the chart is the 12-26-9 MACD, a momentum indicator.  MACD gave a buy from an extreme oversold condition as GLD rose.  On the latest pullback MACD penetrated 0 and has now turned slightly below 0.    Any short term rise in price now would turn MACD up and form a positive double bottom formation.  This would imply further gains over the intermediate term (weeks-months).

SPDR GOLD TRUST ETF (GLD) Daily and 12-26-9 MACD  

The top portion of the GLD chart above is the daily price with a 200-Day Simple Moving Average (blue line).  The 200-day moving average is a common technical indicator which investors use to evaluate the price trend. Very simply put, it’s the average of GLD closing price over the last 200 days.  If the price of the security is above the moving average it’s bullish (green circles).  If the price is below the moving average, it’s bearish (red circles).  Notice how on 07/18/17 GLD is above its 200-day moving average. In addition, Gold (GLD) has penetrated the down trend (black line) suggesting further gains are likely in the near term.

The lower portion of the chart is the 12-26-9 MACD, a momentum indicator.  MACD has generated a fresh buy together with a downside trend line break. This is a favorable development for GLD.

In Sum: 

U.S. equities continue their winning ways with the bulls remaining in control until proven otherwise. Our U.S. equity models remain overall neutral-bullish suggesting higher prices are likely over the next several months.  Another buying opportunity for the gold bullion ETF (GLD) is here.  Gold (GLD) is above its 200-day simple moving average and has successfully tested it weekly low.  As long as Gold (GLD) is above 111.00, look for Gold (GLD) to trend higher.

I would love to hear from you. Please call 516-829-6444 or email at bgortler@signalert.com to share your thoughts or ask me any questions you might have.

*******Article published by Bonnie Gortler in Systems and Forecasts July 20, 2017

 

 

 

 

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Disclaimer: Although the information is made with a sincere effort for accuracy, it is not guaranteed that the information provided is a statement of fact. Nor can we guarantee the results of following any of the recommendations made herein. Readers are encouraged to meet with their own advisors to consider the suitability of investments for their own particular situations and for determination of their own risk levels. Past performance does not guarantee any future results

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