Last month I posted an update to my Special Report that was published in early January of this year. I highlighted four potential scenarios using technical analysis to show what the US stock market patterns might be pointing to for the months ahead. I called them: The Good, The Bad, The Ugly, and The Special. Based on last month’s price activity I believe we can safely eliminate The Special from consideration.
So, where does that leave us now? The chart below combines The Good and The Ugly. Since the end of last month, the S&P has continued breaking down out of the green Rising Trend Channel. In doing so, it also appears the S&P may now be forming a new Declining Trend Channel, identified by the downward-sloping red dashed lines.
PRIMARY TREND: RISING (but correcting)
Chart courtesy of StockCharts.com
What I believe this suggests is that investors should remain cautious and defensive. Price inflation continues to be a problem, one that I do not believe will be solved easily or painlessly. However, I also believe it is better for investors to be willing to lose some buying power by remaining defensive rather than experiencing a double whammy by losing buying power and suffering further investment losses. So far this year the use of inverse exchange-traded funds has significantly contributed to minimizing client investment losses. For readers who would like to reacquaint themselves with this concept, please refer to Chapter 7 of my book – Protecting The Pig.
THE “BLUE LINE”: A CLOSER LOOK
Chart courtesy of StockCharts.com
The S&P finished the month of April 6.1% below the Blue Line, compared to being 2.9% above the Blue Line at the end of March.
Stock market prices may continue to experience short-term rallies followed by continued weakness. I believe tactical investment strategies – like BLUE LINE INVESTING® – may prove beneficial over the months ahead compared to more traditional Buy-and-Hold investment strategies. For any readers who have questions about the current stock market environment or what I have presented in this update, please feel free to call (833) 258-2583 and I will be happy to answer your questions.
The BLUE LINE INVESTING® (BLI) investment process was founded on over 95 years of stock market history. It seeks to identify and align investment decisions with multiyear trends. Various aspects of this process have been illustrated in my book Protecting The Pig: How Stock Market Trends Reveal the Way to Grow and Preserve Your Wealth.
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.
Guardian Wealth Advisors, LLC (“GWA”) is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. More information about GWA’s investment advisory services can be found in its Form ADV Part 2, which is available upon request.