The primary trend of the US stock market according to BLUE LINE INVESTING™ ‚¹
Commentary for month ending April 2018:
The US stock market, as measured by the S&P 500 Index² (S&P) finished the month of April closing +1.47% above the Blue Line, almost unchanged from 1.58% at the end of March. With the S&P remaining above the Blue Line we continue to categorize the primary trend as Positive.
In a recent article entitled Are Price Movements in the Stock Market Random? (click here), we illustrated a potential descending wedge on the weekly charts. According to technical analysis this could be a positive formation suggesting higher prices soon. We believe by observing the market from different periods of time a clearer picture may emerge for how to set our expectations as investors. This technical formation continues to be in play and if prices continue to decline over the coming days to the 2,575 price level on the S&P, we believe this price level represents a preferred entry point for our clients with cash on hand or who are making their initial investments into the BLI strategies. While there are no guarantees the market will decline to this level, or even continue to decline lower if it does, we believe it is an acceptable price level to purchase select financial investments.
Thanks for reading.
Jeff Link
Disclaimers:
¹ Blue Line Investing (BLI) is an alternative to traditional wealth management. BLI uses a disciplined, rules-based investment process to seek investment opportunities, regardless of whether financial markets are rising or falling. Based on technical analysis research, the process applies trend-following along with observations of economic moving averages of the market and other technical indicators.
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.
