an tSionna {S&P 500} Plus A Slight Change

Chart is from Finviz.com.

It has now been 29 trading sessions since the market cracked its lows back in mid-October.  What a difference a month can make.  Of course back then much of the financial media and blogosphere was taken up with practically every negative aspect of what was going wrong then and could go wrong in the future.  Back then we were obsessed with the end of the Government's asset repurchasing program, bleak growth overseas along with he constant conflict in Ukraine and the Middle East, Ebola and declining energy prices.  We listed a lot of what was bothering the market back on October 8th, which was also an echo of an article we posted way back at the end of June called "Time Off".  In that piece we listed a variety of late summer headwinds for the markets that ultimately carried over into the fall.  

Reflecting what we were doing in client accounts back then we changed our short term rating to NET MARKET POSITIVE.  We of course had no unique view back then what the markets would do going forward.  Indeed our most likely scenario we discussed on October 23rd when we suggested that stocks would have to deal with all the resistance created by the summer's sideways market.  We did note in that article that we now had end of year seasonal trading factors in our advantage.  Rather our indicators and the probabilistic analysis of the playbook suggested that certain areas of the market looked attractive at that juncture.  Reflecting these thoughts and disciplines, we were buyers of certain ETFs during this decline.  Our buys varied by investment strategy and also reflected our client's unique risk/reward perimeters.  That mid-October juncture has proven to be a good level of entry for most markets.  From it's lows on October 15, 2014 till last Friday's close the S&P 500 as reflected by its ETF, SPY,  has gained in excess of 13%.

Reflecting on that sharp rise leads us to the conclusion that on a short term basis at least, US equities are no longer as statistically cheap as they were a month ago and are now over bought by our work per many of our short term indicators.  Accordingly and again to reflect what we have been doing in client accounts, we will move our short term indicators for the US equity markets to NET MARKET NEUTRAL.  We will leave the short term indicators for foreign markets unchanged at NET MARKET POSITIVE and our intermediate and longer term indicators also remain unchanged at Positive.

Probability suggests that markets should have a quiet Thanksgiving week unless something unexpected comes over the transom.  Thanksgiving week has an upward bias with the day after {Black Friday for the shopping world} being positive something like 87% of the time.  We'll post tomorrow then we're off until Tuesday of next week.

It is important for readers of this blog to understand that we do not use these changes as a market timing mechanism or trading vehicle, nor do we claim these as such.  This is simply our way of trying to reflect to our readers what we on an aggregate net basis have been doing in client accounts.  A such you should also understand that in general you are seeing me discuss an overall approach to aggregate portfolio strategies that have already occurred and may now even be out of date depending on market conditions.  If you are a casual reader of this blog, you should not construe these changes as a trading strategy that we employ across the board with all of our clients or attempt to emulate anything here as a personal strategy.  I have and continue to warn against this and therefore assume no responsibility if you ignore my advice.  In general we will also not discuss any specific ETF, strategy or any other security we might have purchased or sold.  If you want those sort of specifics you need to hire us!  You can go here to get a better understanding of what these terms mean.

*Long ETFs related to the S&P 500 in client and personal accounts although positions can change at any time.