The US stock market, as measured by the S&P 500 Index¹ (S&P) finished the month of October closing 1.60% below the Blue Line, down from 6.00% above the Blue Line at the end of September. With the S&P declining below the Blue Line we now categorize the primary trend as Neutral.
Last month we commented that “If history continues to repeat, we believe the Blue Line will help inform us again when this positive primary trend in the US stock markets may be coming to an end…whenever that may be in the future.” With this month’s price decline exceeding the Blue Line by over 5% we now have our first Phase 1: WARNING in almost three years. This warning is just that – a warning. It does not require any action now. But it warns us to pay close attention to whether price can rally back up to and through the Blue Line in the near future.
For a summary description of the 3 phases of our Sell Process, please click here and turn to page 7 of the Case Study of the S&P 500 Index at the bottom of the webpage.
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.
¹ 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.
The volatility (beta) of an account may be greater or less than that of an index. It is not possible to invest directly in an 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. Forward looking statements cannot be guaranteed.
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