Play Till May ?

April 15,2017

As someone who has seen his year to date profit wiped out during the first 10 days of May, I respect this well know admonition and pay extra special attention to the signals the market is giving off as we approach May 1.

As anyone who regularly reads this blog knows, I respect ( even more ) the 200 day timing model for the ETF “SPY” ( the top 500 USA stocks )which trades as a basket . On Tuesday SPY’s price, $232.41, broke below its 50 day moving average ( $234.51 ), ( support ) so I’ve postponed any new market purchases and will wait to see what develops this week. SPY’s 200 day moving average, $220.75 sits 5.1% below where we are now.

My chart readings for stocks are settling into a performance pattern I would describe as anemic.

More and more, people are referring to the market’s performance between November 1 and now as ” the Trump Bump “, an expression of confidence that Trump will deliver on his promises. Now, with investigations on his relationship with Russia heating up combined with failures to deliver a voting victory on health care, demands for his tax returns, bellicose saber rattling by Korea and Putin, and what seems to be a pivot toward liberals, The ” bump ” has become a ” bimp ” and uncertainty is creeping in. Uncertainty and higher stock prices seldom travel in the same direction.

But, but, but, interest rates are still low and that means stock yields can compete with bond yields. The USA is navigating through troubled international waters and even though Trump says he would favor a weaker dollar ( higher interest rates ) the USA is seen as a safe haven and that means international demand for the dollar, and both stocks and bonds.

Me ? I haven’t been as heavily invested as I should have been and that means a lower overall performance for my portfolio during the Trump Bump even though I was holding the right cards. I’m still learning ! But, smallerlosses if SPY nose dives through its 200 day moving average on the 30th.

My biggest equity position is 3 April PUTS on Amazon at 860, 855 and 840.
My biggest ETF position is with QQQ.

I’ll get aggressive again as SPY clears the April 30th hurdle and my individual stock charts begin to
show a pattern of accumulation rather than distribution.

Richard Maurice Gore

Leave a Reply