Crocuses-SPY

Here is the S&P 500 ETF {SPY}.

2. Shows the trading range we have been talking about for what seems like an eternity. We are still stuck in it albeit closer to the top than its bottom.

1. Shows that we have decisively broken through the market's downtrend line from last fall. More importantly is the crossing of two moving averages (green over red lines). We cover 3 different moving average comparisons. We refer to them as our canaries. They give us early warnings about a change in trend. These moving average shown here are proprietary. That is it is a back tested comparison of different averages that our research indicates as a fairly reliable indicator of a change in trend. We have back tested these moving averages in some cases as far back as the 1920's. One of our other moving averages which we follow is the widely well known crossing of the 50 day over or under the 200 day moving average. Since a 50/200 cross is much more of a lagging indicator we use it as a confirmation of what we are currently seeing in our other proprietary averages. A "cross" of the green line (a shorter term moving average) over the dark red line (a longer term moving average) is called a "Golden Cross" and is considered a bullish development. The inverse of that (red over green) is known as a "Death Cross" and is considered bearish. These averages are subject to fluctuation as the trend changes so it is possible that these lines could move back and forth for awhile. However, it is the first inklings of a possible change in investment trend and one that most be closely monitored. A change in the market's investment posture would definitively switch the game plan from defensive positioning to an offensive profile.

3. Irregardless of these events the market is currently very overbought and it is possible that some kind of correction could unfold over the next couple of weeks. Note however that markets can correct by price (a decline) or by time (a market that trends listlessly nowhere for a certain period of time).

*Long SPY in client accounts.