August 31 Sell Signal Still Good

September 30. 2015

Don’t mess with this SPY timing model.

It signaled  “SELL ” as of the close August 31.

As of the close today, September 30, 2015,  the 200 day moving average of SPY was $204.43. The closing price of SPY was $.191.59,  6.28 % below $204.43  By definition a sell signal.

Are you surprised ?

Take a  look at some background factors.

1- You have Federal Reserve Officials including Janet Yellen publicly vacillating on a decision to raise rates  a miserable quarter percent ( 25 basis points ) even though they know a rate hike is not warranted by an overheating economy and could throw us into a recession. A rate hike and the resultant stronger dollar would help our Euro friends revive their economies via exports to us…at the expense of  exports  by our major international companies.  And that prospect is a ” no sale ” on Wall Street !

2- More and more China is looking like a fragile economy, with a decline in China’s stock market and economic indicators signaling weak buying power. Are you listening  Apple ?  Haven’t heard Carl Ichaan talking about a $200 Apple recently.

3- You have all the maneuverings of Putin and Obama relative to Syria including the threat ( made good ) of Russia directly attacking our Sunni  “friends” ?  . So it looks like Russia is lining up the Shites of Syria and Iran against the Sunnis of Saudi Arabia, Jordan, Iraq etc. for a replay of the Iraq / Iran war on a Syrian playing field ( for  starters ) with Putin creating problems that will take our focus off the Ukraine and get revenge for the sanctions.

4- You have a mass of humanity migrating toward Germany and threatening to change the multi national culture of Europe.  Who is hidden in that Trojan horse ?

5 – You have all the Republican players calling each other ( and Obama ) out on how terrible things are.  And, you have Bernie demanding wholesale systemic reform of our political and financial institutions…because our economy is rigged in favor of the 1% ultra rich.

Does this add up to a ” Wall of Worry ” that markets can climb ?  ( even with interest rates as low as ours )….Or is this a “Wall of Uncertainty” that equity markets abhor with a cascading  selloff continuing ?

You be the judge…I don’t have an answer I’m willing to  underwrite with real money. I’m a trend follower….I’ll ride with the SPY 200 day moving average / month end model and wait for a break to the upside before I dive in.  According to Bill Gross ex-guru of PIMCO….no kind of instrument is worth investing in versus the safety of cash at this particular point.

But that doesn’t mean I can’t nibble at ETFs and Stocks which have sold off but which I deem ” worthy ” of investment. Example: chosing worthy pharma stocks and bio ETFs as a reaction to Hillary’s threats and investing in them for their outstanding USA performance and resistance to her  campaign rhetoric.

So who do I like for this type of small investment ( 10 to 15 shares per name ) every time the market sells off another 5% and they remain resistant.

ETFs:  XLV….XBI….IJR….ITA

Equities: ORLY…..ALK….FB….BA…..GILD…..

Won’t be back at you till October 31 unless there is a big market moving  development that deserves analysis  and comment

Richard Maurice Gore

 

 

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