Investor Spotlight

Timing The Market

We all faced a train wreck in the market last week. My analysis of the market 3 weeks ago led me to conclude that it was time to seriously consider reducing the exposure in the market. It was hard to imagine and accept that the $DJI could retrace a 1,000 points. The headline of my blog that weekend (January 21st) was:

Dow Drops 1,000 points!

$DJI had gained 1,300 points (+6%) during the first 3 weeks in January. That was an unsustainable performance for January when on an average the month has returned +1.12% for the $SPY over the last 50 years. Last Friday I concluded that the Market is in Correction. I made that call in my blog on Feb 4th. Some found my call questionable. Poring over the data and analyzing the $VIX and the Bollinger bands on the 3 major indexes - $SPY, $QQQ and $DJI, convinced me to make that call. We had also piled up 5 distribution days during the week prior as well. We had already dropped 1,300 points on the $DJI (gave up half of the gains we had made in January) and I suggested to my readers and followers to start raising CASH. If you procrastinated last week and did not raise your trailing stops on the winning position and did not close out the laggards, you would be facing the $DJI dropping another 1,126 points. That would be giving up all the gains that we had made in January and some. Heeding my call saved me from losing only half as much on the $DJI, $SPY and $QQQ. IBD (Investors Business Daily) did change the market pulse to "Market in Correction" when we had another distribution day on Thursday Feb 8th.

Market Status

We are not facing any recession right now and the unemployment rate is only 4.1%. We have over 75% of the $SPY components already reported earnings and for the most part they have reported increased earnings and increased sales with increasing margins. The economy is healthy and companies are giving out bonuses to their employees. What we have witnessed in the last 2 weeks is a re tracement to the mean. Market is still exhibiting a bullish status when you analyze the monthly charts of the major indexes. There is always a counter trend in any bullish trend. Currently, the performance of the 3 major indexes from its all time high attained 2 weeks ago is:

$QQQ ... - 8.69%
$SPY ... - 8.77%
$DJI ... - 9.11%

We had a very healthy bounce on the indexes on Friday February 9th but the indexes are still hovering around the 100 day sma(simple moving average). We need 3 more days of similar rally in higher volume to convince me that bulls are really in charge and we are heading back to the highs we made 2 weeks ago.

Stocks to Monitor

The market has made a very violent downtrend moves in the last 2 weeks and it could just as well make a a very similar counter trend move to reclaim the highs we made 2 weeks ago. This is the critical week to build up an actionable Stock Watch List. Here are some stocks to look at and monitor this week:

$AMZN
$NFLX
$NOW
$EBAY
$ANET
$ADBE
$CME
$IBKR
$AMTD
$LPLA
$CMA
$EW
$ABBV
$ABMD
$TSS
$MA
$BA
$NOC

Mentoring Program

Were you stunned last 2 weeks when the market dropped 2,426 points on the $DJI? Do you know what preventive actions you should have taken 2 weeks ago to mitigate losses to your portfolio? If you are feeling sick to your stomach with the train wreck we faced last week, than you need to make a commitment this year to learn:

How to TIME the Market?
How to find the Winning Growth Stocks?
How to Buy the Stocks Right?
How to Plan your Trade for Profit, Loss and Time in the trade?
How to Sell your Stock Right?

I shall be opening up a very limited number of slots for mentoring in February. Schedule a FREE 30 minutes of "Discovery Call" with us and see how best we can help you become a consistent and a profitable trader and an investor in 2018. Don't procrastinate and pass up the opportunity of making a difference in your portfolio. Start out the new year with a resolution to invest in your education.