The BLUE LINE INVESTING® PRIMARY TREND Update: October 2019

“The only thing that is constant is change”

– Heraclitus

 

The US stock market, as measured by the S&P 500 Index (S&P, see the chart below), finished the month of October up 4.91% above the BLUE LINE, 0.36% higher compared to the end of September. We cautiously categorize the primary trend as Positive due to recent price behavior.

 

BLUE LINE PERSPECTIVE

Chart courtesy of StockCharts.com

 

As a quick reminder to our readers, we monitor the relationship between price and the BLUE LINE over time to help identify which stock markets worldwide are experiencing rising primary trends, sideways primary trends, and declining primary trends. We prefer to invest in those markets experiencing rising or sideways primary trends, while avoiding those markets experiencing declining primary trends. The BLUE LINE helps us identify these trends – and when changes may be taking place between them.

 

TREND CHANNEL PERSPECTIVE

While performing research for a project to be announced next year, I discovered the following potential channels within which the S&P 500 Index may be trending. If you observe this chart from the left and move to the right, you may notice how price tends to act like a ping-pong ball and “bounces” between the top and bottom of the channels. Sometimes price breaks out into a higher channel above the previous one, while at other times it breaks down into a lower channel.

Chart courtesy of StockCharts.com

 

One potential risk that may occur sometime in the future is for price to decline and “retest” the lowest rising green dashed line. That support line dates to early 2016 and while it does not have to happen soon, or even at all, I believe investors should be mindful of its possibility over the coming months.

Thank you for reading the BLUE LINE INVESTING® PRIMARY TREND update, and please do not hesitate to call us at (833) 258-2583 with questions or if we may be of service.

Jeff Link

 

Do you find this commentary beneficial? If not, please let me know how I can improve it. Please send an email to Info@BlueLineInvesting.com.

 

Disclaimers:

BLUE LINE INVESTING® (BLI) is an investment process that seeks to align investment decisions with the prevailing primary trend of the financial markets. BLI seeks to remain fully invested when the financial markets are experiencing either a long-term rising primary trend or a short-to-intermediate sideways trend. When the primary trend begins declining however, the process follows a 3-phase sell process to attempt to limit downside loss. We believe Warren Buffett said it best with his two rules: “Rule No. 1 – Never lose money. Rule No. 2 – Never forget Rule No. 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.

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 BLI. The opinions referenced are as of the date of publication and are subject to change without notice. BLI 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. Forward looking statements cannot be guaranteed.

Advisory services offered through Aptus Capital Advisors, LLC, a Registered Investment Adviser registered with the Securities and Exchange Commission. 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 (251) 517-7198. Aptus Capital Advisors, LLC is headquartered in Fairhope, Alabama.