Chart courtesy of StockCharts.com
The US stock market, as measured by the S&P 500 Index¹ (S&P) finished the month of November essentially at the Blue Line, down from 1.60% above the Blue Line at the end of October. With the S&P currently at the Blue Line, and having rallied from underneath the Blue Line, we continue to categorize the primary trend as Neutral.
Technically speaking, the 2,800 price level on the S&P appears significant. If the S&P can rise through that price level, it is possible the market may continue to rally to test the October highs. If however, it fails to rise above and hold above 2,800, the current price “bounce” may prove short-lived. Based on what is being observed at the present time, I am more inclined to begin looking for opportunities to add protective hedges to some of the BLUE LINE INVESTING® strategies as a precaution in the near-term. (Author’s note: this article was written and submitted for compliance approval Monday morning, December 3rd).
For clients of BLUE LINE INVESTING®, please feel free to call me at (833) 258-2583 if you would like to further understand how we use protective hedges, and when used, their potential impact to strategy performance.
Blue Line Investing (BLI) is a disciplined, rules-based investment process that attempts to identify the primary trend within the financial markets. The process uses technical analysis, trend-following, and historical pattern recognition to define the primary trend as either positive, neutral, or negative. Once identified, all investment-related decisions are aligned with that trend. BLI is an alternative to traditional, passive investing, in that it attempts to help investors save time and money over a full market cycle, through strategic changes within our strategies as primary trends change within the financial markets.
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.
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.