The Blue Line Investing (BLI)¹ Market View of the
 S&P 500 Index² for the month ending September 2017

 

Commentary:

The S&P 500 Index (S&P) finished the month of August closing +5.62% above the Blue Line, almost one percent higher from 4.66% at the end of August. With the S&P remaining above the Blue Line we continue to categorize the primary trend as Positive.

Last month the Dow Theory “non-confirmation” was negated when the Dow Jones Transportation Average³ rose to a new high, confirming the new high in the Dow Jones Industrial Average⁴. In addition, all previous negative divergences that were observed in the major U.S. stock market indices during September have also been negated. This does not mean a correction cannot, or will not occur; but rather, the immediate concern has lessened.

Eleven months have now passed since the S&P last “tested” the Blue Line. There have only been 4 other times since 1980 when the gap between “tests” was longer:

May 2003 – May 2004: 12 months

October 1992 – March 1994: 18 months

January 1995 – July 1996: 18 months

November 2012 – October 2014: 23 months

As a reminder to our Blue Line Investing clients, the Blue Line represents our preferred price point when making an initial or additional purchase to an investment.

Thanks for reading.

Jeff Link

Disclaimers:

¹ Blue Line Investing (BLI) is a disciplined investment process, based on technical analysis research. The process applies trend-following, along with observations of the moving averages of the market. Key to the process is the “blue line”, which is derived from comparing an investment’s price against its moving average. BLI monitors those activities over time in order to determine allocations within client accounts.

² The S&P 500 Index is one of the most commonly followed equity indices, and many consider it one of the best representations of the U.S. stock market, and a bellwether for the U.S. economy. It is comprised of 500 large companies having common stock listed on the NYSE or NASDAQ. The volatility (beta) of the account may be greater or less than the index. It is not possible to invest directly in this index.

³ The Dow Jones Transportation Average is a price-weighted average of 20 transportation stocks traded in the United States.

⁴ The Dow Jones Industrial Average (DJIA) is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange (NYSE) and the NASDAQ.

Technical analysis is a method of evaluating securities by analyzing statistics generated by market activity, such as past prices and volumes. Technical analysis attempts to predict a future stock price or direction based on market trends. The assumption is that the market follows discernible patterns and if these patterns can be identified then a prediction can be made. The risk is that markets may not always follow patterns. There are certain limitations to technical analysis research, such as the calculation results being impacted by changes in security price during periods of market volatility. Technical analysis is one of many indicators that may be used to analyze market data for investing purposes and should not be considered a guaranteed prediction of market activity. The opinions expressed are those of Blue Line Investing. The opinions referenced are as of the date of publication and are subject to change without notice. Blue Line Investing reserves the right to modify its current investment strategies based on changing market dynamics or client needs.

Past performance is not indicative of future results. This material is not financial advice or an offer to sell any product. The information contained herein should not be considered a recommendation to purchase or sell any particular security. This information is intended for educational purposes only.

Advisory services offered through Gordon Asset Management, LLC (GAM). GAM is an SEC-registered investment adviser. Registration does not imply a certain level or skill or training. More information about the advisor, its investment strategies and objectives, is included in the firm’s Form ADV Part 2, which can be obtained, at no charge, by calling (866) 216-1920. The principle office of Gordon Asset Management, LLC is located at 1007 Slater Road, Suite 200, Durham, North Carolina, 27703.