The Blue Line Investing (BLI)¹ Market View of the
S&P 500 Index² for the month ending October 2017
The S&P 500 Index (S&P) finished the month of October closing +6.44% above the Blue Line, almost one percent higher from 5.62% at the end of September. With the S&P remaining above the Blue Line we continue to categorize the primary trend as Positive.
Twelve months have now passed since the S&P last “tested” the Blue Line. There has now only been 4 other times since 1980 when the gap between “tests” was longer:
October 1992 – March 1994: 18 months
January 1995 – July 1996: 18 months
November 2012 – October 2014: 23 months
At present we believe calendar year 2017 seems to be “behaving” very similarly to 1995. If time permits, we hope to issue a special “Technically Speaking” article to illustrate visually what we mean by that statement. For those who do not recall 1995, that year marked the first of 5 strong years in the stock market that culminated in the stock market doubling in value from 1995 through the stock market peak in 2000. While the past is never indicative of the future, I eagerly anticipate what the future may hold if the markets “behavior” mirrors the past.
Thanks for reading.
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.
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.