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The BLUE LINE INVESTING® PRIMARY TREND Update: January 2020

“The only thing that is constant is change”

 – Heraclitus

The US stock market, as measured by the S&P 500 Index (S&P), finished the month of January 6.2% above the Blue Line, compared to 8.40% at the end of December. As such, we view the current primary trend as a rising trend.

 

BLUE LINE PERSPECTIVE

Chart courtesy of StockCharts.com

 

However, last month I expressed my concern that the 4th quarter 2019 rally appeared very “steep.” Unless the S&P is about to break out and rise much higher, this “steepness” may be warning of a temporary price “top.” IF that proves true, there are only two other directions the stock market can go: sideways or down. In the chart above I have added downward sloping arrows to highlight possible price targets if the stock market continues to decline over the coming weeks or months.

Something else worth taking notice of is the divergence that took place on January 22nd. The S&P and the NASDAQ made new price highs, but the Dow Jones Industrial Average did not.  The reason this may be important, at least in the shorter-term, is the last time I recall this happening was at the price bottom in January 2016. During that month, the S&P and the NASDAQ made new price lows, but the Dow Jones Industrial Average did not. Therefore, if a price rally does not materialize relatively soon, the market may retrace some of the price advance from last year.

 

PRIMARY TREND PERSPECTIVE                  

 

To better align this monthly update with both our process and my book scheduled to be published this summer, I will use the following chart going forward to illustrate and monitor the primary trend as we view it.

Chart courtesy of StockCharts.com

 

The two rising dashed green lines represent the primary trend. In the past few years, each time price rose to the top line labeled “Trend Channel Resistance,” shortly thereafter it experienced a price correction. As of today, price is turning down once again from that green line where the red down arrow has been circled. Will it drop all the way back to the bottom of the channel, or even break down through it? Stay tuned to find out over the coming months.

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

Jeff Link

 

Disclaimers:

BLUE LINE INVESTING® (BLI) is an actively managed investment process that pursues our mission by combining a trend following investment philosophy and a “buy low, sell high” investment strategy. Our mission is to grow our client’s financial wealth over a full market cycle in a risk-managed and tax-efficient way.

We monitor the relationship between price and the Blue Line over time to help identify which stock markets worldwide are experiencing rising, sideways, 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.

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.

ACA-20-22

The BLUE LINE INVESTING® PRIMARY TREND Update: December 2019

“The only thing that is constant is change”

– Heraclitus

The US stock market, as measured by the S&P 500 Index (S&P), finished the month of December 8.40% above the BLUE LINE, compared to 7.10% at the end of November. As such, the current primary trend is categorized as a rising trend.

 

BLUE LINE PERSPECTIVE

Chart courtesy of StockCharts.com

As a quick reminder, 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.

At the present time, my primary concern pertains to the “steepness” of the current price rise. Just two years ago the S&P experienced a steep rise where price exceeded the BLUE LINE by almost 13%, right before it experienced a violent price correction back to the BLUE LINE. Please refer to the red circle on the chart below, courtesy of StockCharts.com.

 

Chart courtesy of StockCharts.com

 

Whether the US stock market is currently rising because of “a good economy”, capital flight out of the Eurozone, or some other reason entirely, sharp price rises tend to be followed by sharp price declines. While the past does not have to repeat, I believe this bears close monitoring over the coming weeks.

 

TOP HEAVY(er?)

In a special report published to this blog on November 15, 2019, a reference was made to the top five largest stocks in the S&P 500 Index measured by market capitalization. If you would like to read it, please click here. Out of the 505 stocks that comprise the S&P, Apple, Inc. was the second largest at that time with a weight of 4.34%. In other words, price changes to Apple stock alone will likely impact the price of the index to a larger degree than the combined smallest 100+ stocks of the index.

Chart courtesy of StockCharts.com

As of the end of December, Apple now represents the largest weight in the S&P. Of the 30 stocks that comprise the Dow Jones Industrial Average, Apple is now the third largest priced stock and represents 6.97% of that index. And of the 100 stocks that comprise the Nasdaq 100, Apple is also the largest weight, representing 11.6% of the index. This information is as of December 31, 2019 and can be found at www.slickcharts.com.

It is interesting to note that Apple’s stock price is trading 31% above its BLUE LINE, which according to the BLUE LINE INVESTING® process is high. This is being pointed out to illustrate that the major US stock indices are becoming more top heavy with each passing day.

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

Jeff Link

 

Would you find this service more beneficial in video format? If so, please let me know by sending an email to Info@BlueLineInvesting.com. I am considering changing format to a Zoom presentation to narrate this in the future for further clarity.

 

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.

ACA-19-42

 

 

The BLUE LINE INVESTING® PRIMARY TREND Update: November 2019

“The only thing that is constant is change”

– Heraclitus

 

The US stock market, as measured by the S&P 500 Index (S&P), finished the month of November 7.10% above the BLUE LINE, compared to 4.91% at the end of October. The primary trend is currently categorized as Positive.

 

BLUE LINE PERSPECTIVE

Chart courtesy of StockCharts.com

 

As a quick reminder, 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

Last month I mentioned I was cautiously categorizing the primary trend as positive. With several client inquiries I will clarify what I meant by that, by putting the current stock market trends into context with the past. Please review the chart below of the S&P 500 Index from 1965 through 1969.

Chart courtesy of StockCharts.com

When looking at the five-year chart above, what you see is a rising trend channel labeled “A” that experienced a price correction labeled “C” in 1966. When the price correction completed, a price rally resumed forming a new rising trend channel labeled “B.” As prices rose, they were stopped by the previous green dashed line, identified by the three gray arrows. Thereafter, price corrected further down to the lowest green dashed line to establish the new rising trend. Price bounced off that green line and rose higher, eventually experiencing a “price top” in late 1968, declining thereafter. The S&P 500 lost over 25% of its value when the trend changed and declined from late 1968 into 1970.

How does the current trend today compare to the mid-to-late 1960’s? Please review the chart below of the S&P 500 Index from 2015 through today.

Chart courtesy of StockCharts.com

When looking at the five-year chart above, what you see is a rising trend channel labeled “A” that experienced a price correction labeled “C” at the end of 2018. When the price correction completed, a price rally resumed forming a new rising trend channel labeled “B.” With this year’s price rally, price has been stopped at the previous green dashed line, identified by the three gray arrows. So, if history decides to repeat itself, it is possible for price to correct down to the lowest green dashed line at some point in the months ahead to establish the new rising trend. Unless the S&P 500 eventually rises back into the original trend labeled “A”, I believe the danger increases that the market could form at least a temporary top within the next year or two, like the late 1960’s. If this occurs, a sell process could come in handy to attempt to limit investment loss should price decline below and remain below the BLUE LINE.

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

 

Would you find this service more beneficial in video format? If so, please let me know by sending an email to Info@BlueLineInvesting.com. I am considering changing format to a Zoom presentation to narrate this in the future for further clarity.

 

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.

ACA-19-20

 

 

 

A BLUE LINE INVESTING® SPECIAL REPORT: November 15, 2019

“The only thing that is constant is change”

– Heraclitus

 

TOP HEAVY?

Today while performing my weekly research, I came across what may be an important factor regarding the current stock market rally. With the media continuing to announce new highs almost every other day (even if prices rise by only a few points), I was curious to see which specific stocks may be contributing the most in the current price rally. Please refer to the screenshot below that highlights the top five stocks by market weight for the S&P 500 Index as of the close of trading on November 14, 2019. All information is courtesy of SlickCharts.com (www.slickcharts.com).

From the data above, you can observe that of the 505 stocks that comprise the S&P 500 Index, 15% of the current weight of the index is comprised of only 5 stocks: Microsoft, Apple, Amazon, Facebook, and Berkshire Hathaway. Using the BLUE LINE INVESTING® process, Microsoft’s share price is currently trading 15% above its BLUE LINE; Apple’s is 26% above its BLUE LINE; Amazon is 2% below its BLUE LINE; Facebook is 7% above its BLUE LINE; and Berkshire Hathaway is trading 6% above its BLUE LINE. While three of the five are trading within what our process considers “healthy” ranges, Microsoft and Apple are not. As a quick reminder, in February 2018 the S&P 500 Index rose almost 13% above its BLUE LINE, right before experiencing an 11% price correction.

My intent for this special report is not to make a prediction of what may happen next. The market may very well continue to rise in the short-term. Or, at some point it may experience a sharp price correction. Historically speaking, the higher price continues to rise in relation to the BLUE LINE with such a concentration at the top, the greater the risk of at least a price correction.

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 it can be improved. 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.

ACA-19-13

 

 

 

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.

 

 

 

 

The BLUE LINE INVESTING® PRIMARY TREND Update: September 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 September +3.60% above the BLUE LINE, up from +2.70% above the BLUE LINE at the end of August. We continue to categorize the primary trend as Neutral primarily due to price behavior remaining within what we believe to be a sideways trend.

 

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.

 

SPECIAL UPDATE: THE DOW JONES INDUSTRIAL AVERAGE

The weekly* charts below are being presented to illustrate two potential short-term trends we are currently monitoring within the sideways trend in the Dow Jones Industrial Average. As always, we suggest you click here to familiarize yourself with last month’s comments before reading further.

 

The potentially unfavorable short-term trend

Chart courtesy of StockCharts.com

 

As can be seen above in the upper right-hand corner, price is once again at the top of what we believe to be a sideways trend (identified by the sideways, dashed gray lines). However, almost every weekly price rise since early August has stopped underneath the rising red dashed line. IF this price formation is in fact what is called an Ascending Wedge, we do not believe you should be surprised if the stock market experiences a price correction over the coming weeks. We alluded to this possibility in a previous post, and that potential still exists.

If prices do correct, we do not believe it will result in a change in trend. We continue to believe the sideways trend is currently dominant, and therefore expect price to continue to remain rangebound between 27,000 on the top and approximately 24,000 on the bottom, identified by the gray-dashed lines.

 

The potentially favorable short-term trend

Chart courtesy of StockCharts.com

Alternatively, the chart above shows the possibility of a new rising trend within the sideways trend, identified by the rising green dashed lines. IF prices correct soon and do not decline below the 25,500-price level, it could lend support to this possibility. But even if they do correct below the 25,500-price level, it is still possible for price to decline to as low as the 24,000-price level without the primary sideways trend changing.

With that said, price is currently above the BLUE LINE, which we believe is positive. But that could change in the short-term, and if it does, we suggest you continue to ignore the media narrative and stay focused on the primary trend. We believe it will eventually change to a rising – or declining – trend. Until that time, we patiently wait for the market to provide further hints as to which one it may be.

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

 

Disclaimers:

 * Each vertical line on the chart represents one week of price change.

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.

The BLUE LINE INVESTING® PRIMARY TREND Update: August 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 August +2.70% above the BLUE LINE, down from +5.00% above the BLUE LINE at the end of July. We continue to categorize the primary trend as Neutral primarily due to price behavior remaining within what we believe to be a sideways trend.

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.

SPECIAL UPDATE: THE DOW JONES INDUSTRIAL AVERAGE

The weekly* chart below has been updated from last month for the Dow Jones Industrial Average. I suggest you click here to familiarize yourself with last month’s comments before reading further.

Chart courtesy of StockCharts.com

Over the past thirty days, price declined out of what is believed to be an ascending wedge, identified in the chart above by the converging, red-dashed lines. When you compare this chart to the one from last month, you will notice price corrected down through the bottom red-dashed line. Thereafter, each rally attempt over the past three weeks has stopped rising when price reached the bottom red dashed line. IF our assessment of this technical formation as an ascending wedge is correct, we believe investors should expect further price decline in the days or weeks ahead.

With that said, we continue to believe the primary trend is a sideways or consolidating trend. As such, if the Dow Jones Industrial Average declines back towards the 24,000 price level, we do not believe investors should be surprised. If price remains within the horizontal gray-dashed lines, the sideways primary trend is prevailing. We suggest you ignore the media narrative and stay focused on the primary trend.

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

Jeff Link

 

Disclaimers:

 * Each vertical line on the chart represents one week of price change.

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.

The BLUE LINE INVESTING® PRIMARY TREND Update: July 2019

Please read the entirety of this update.

The US stock market, as measured by the S&P 500 Index (S&P – see the chart below), finished the month of July +5.00% above the BLUE LINE, compared to +5.20% above the BLUE LINE at the end of June. We continue to categorize the primary trend as Neutral primarily due to price behavior remaining within what we believe to be a sideways trend.

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.

 

SPECIAL INSERT: IS THE DOW JONES INDUSTRIAL AVERAGE HINTING AT ANOTHER PRICE CORRECTION?

The weekly* chart below of the Dow Jones Industrial Average shows three changing trends over the past five years. The gray dashed lines on the left show a sideways trend from 2014 – 2015 (2 years). The rising green dashed lines highlight a rising trend from 2016 – 2017 (2 years). And the sideways gray dashed lines on the right highlight what we believe to be a sideways trend that began in early 2018. However, we notice what may be a technical formation called an ascending wedge identified by the two converging red dashed lines inside the sideways trend. IF this technical formation plays out, investors should expect a price correction in the near future.

Chart courtesy of StockCharts.com

You may notice how price acts like a yo-yo within a sideways trend, first rising, then falling, then repeating. So far there have been three attempts on breaking out to the upside while only two on the downside. We would not be surprised if price corrects back towards 24,000 to the bottom of the gray dashed line once again. So, don’t be surprised with continued stock market price volatility – that is what is most commonly associated with sideways trends.

For readers of this BLUE LINE INVESTING® PRIMARY TREND update, please do not hesitate to call us with questions at (833) 258-2583.

Jeff Link

 

Disclaimers:

* Each vertical line on the chart represents one week of price change.

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.

 

The BLUE LINE INVESTING® PRIMARY TREND Update: June 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 May +5.20% above the BLUE LINE, compared to -1.00% below the BLUE LINE at the end of May. We continue to categorize the primary trend as Neutral.

 

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.

Chart courtesy of StockCharts.com

 

THE TREND PERSPECTIVE:

The weekly* chart below of the S&P shows three changing trends over the past five years. The rising Green dashed lines highlight a rising trend; the sideways Gray dashed lines highlight a sideways trend; and when pictured, declining Red dashed lines highlight a declining trend.

Chart courtesy of StockCharts.com

Based on the observable pattern above (see Sideways Trend #2?) the S&P appears to be continuing in a sideways trend. As we wrote in a previous post, until the S&P breaks out above the dashed gray line (significantly), the risk continues that it may still decline to test the bottom dashed gray line of the channel. For informational purposes only, if that were to happen over the coming weeks or months it would equate to a price decline of approximately 10%. This is the third or fourth time the S&P has hit a “high” going back to early 2018. But as you can see, so far, the S&P has declined thereafter. While we do not know if that will happen again soon, it remains a distinct possibility.

 

For readers of this BLUE LINE INVESTING® PRIMARY TREND update, please do not hesitate to call us with questions at (833) 258-2583.

 

Jeff Link

 

Disclaimers:

 * Each vertical line on the chart represents one week of price change.

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.

The BLUE LINE INVESTING® April 2019 Primary Trend Update

Commentary: The US stock market, as measured by the S&P 500 Index (S&P) finished the month of April 6.70% above the BLUE LINE, compared to +4.00% above the BLUE LINE at the end of March. We continue to categorize the primary trend as Neutral.

THE BIG PICTURE

The chart below is a weekly version of the S&P of the past five years. Each vertical line on the chart represents one week of price behavior.

From a technical analysis perspective, the S&P may be at resistance. If you refer to “Sideways Trend 1” that occurred from 2014 through 2016, you will notice price bounced like a ping-pong ball between the upper and lower dashed gray lines as price consolidated past gains. If price fails to make material progress from current price levels it is possible the market may do something similar over the coming months and/or quarters. Based on our observations, we believe it is possible that prices could “bounce” down 11% from current prices if Sideways Trend 2 plays out. Please note – we are not predicting this will happen. We are simply pointing out what could happen if the current primary trend is a sideways trend, compared to a rising trend.

For clients of BLUE LINE INVESTING® please do not hesitate to call us with questions at (833) 258-2583.

Jeff Link

 

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.

The BLUE LINE INVESTING® March 2019 Primary Trend Update

Commentary:

The US stock market, as measured by the S&P 500 Index (S&P) finished the month of March 4.00% above the BLUE LINE, compared to +2.81% above the BLUE LINE at the end of February. With price behavior continuing to be volatile with price oscillating through the BLUE LINE, we continue to categorize the primary trend as Neutral.

THE BIG PICTURE

Sometimes it can help to step back and look at the big picture. The chart below is a weekly version of the S&P of the past five years. Each vertical line on the chart represents one week of price behavior.

From a technical analysis perspective, the S&P may be within a second sideways trend. If so, it is possible for price to consolidate over the coming months at or below the current price level, similar to what happened during 2014 and 2015 (See sideways trend 1 above).  At this moment the S&P is back to where it was at the end of January 2018.

We have recently posted a video presentation on our website called A Historical Perspective that illustrates these types of trends, or trend channels, as they are often called. Please visit www.BlueLineInvesting.com/process if you would like to see how these types of trends have played out since the 1930’s.

For clients of BLUE LINE INVESTING® please do not hesitate to call us with questions at (833) 258-2583.

Jeff Link

 

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.

Technically Speaking…The US stock market may be at a crossroads

After recently passing the half way point of the calendar year, the US stock market has so far provided low, single-digit returns. So, what might investors expect for the second half of the year? More of the same or something different? While no one has a crystal ball I have found technical analysis to be a helpful tool to set my expectations. The chart below, in my opinion, provides two important items for investors to pay attention to at present.

Chart courtesy of StockCharts.com

First, the stock market may be on the verge of making a trend decision. There are two patterns that can be identified on the weekly chart above – a consolidating channel and a rising channel. The consolidation channel labeled “1A” and “1B” illustrates a period when stock prices remained range bound and stagnated. Such was the case from late 2014 through early 2016. This pattern eventually became a rising channel labeled “2A” and “2B.” Such a channel illustrates a period when prices rise higher and higher over time.  But now we see the potential for a new consolidation channel labeled “3A” and “3B” forming inside the rising channel. So how can you determine which of the two is the dominant channel right now? Based on the chart it appears the US stock market is at a crossroads. If price rises decisively above line “3A” we believe it is likely the rising channel will continue with higher prices to come. But if prices decline decisively, possibly below line “2B,” it is likely a consolidation channel will continue, with stagnant prices for the foreseeable future.

Second, on each of the stock rallies since February, the relative strength indicator has topped at 60. This can be observed with labels 4A and 4B, 5A and 5B, and 6A and 6B. Historically speaking, I have found that relative strength tends to top out at 60 during consolidation channels, as well as with negative primary trends. Price does not typically continue in a rising channel with relative strength remaining at or below 60.

You may be wondering how this information can be beneficial. The answer has to do with money you already have invested versus money you may be considering investing. For money already invested, this information sets the expectation that prices are likely to consolidate or continue to rise for the foreseeable future. If that is your expectation there is likely no need to hedge or sell any investments over fear of a stock market downturn. For money being considered for investment, the outcome determines a purchase decision. If price decisively rises above line “3A” it could be advantageous to buy. However, if price declines decisively below line “3A” it could signal to delay new purchases, as lower prices may result in the near-term. Whatever happens over the coming days and weeks, the relationship between price and relative strength should help identify which of the two trend channels is dominant at this time.

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 using specific Exponential Moving Averages (EMAs) of the market along with other technical indicators. A moving average is a widely used indicator in technical analysis that helps smooth out past price action by filtering out the “noise” from random price fluctuations. EMA’s can be calculated for any time period. Some examples include the 5 day EMA; 50 day EMA; and 150 day EMA. We have attempted to simplify this by calling the various EMAs we use in our process the “Blue”, “Purple” and “Green” lines.

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.

The relative strength measure is based on historical information and should not be considered a guaranteed prediction of market activity. It is one of many indicators that may be used to analyze market data for investing purposes. The relative strength measure has certain limitations such as the calculation results being impacted by an extreme change in a security price.

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 and should not be considered financial advice. It should not be assumed that the investment recommendations or decisions we make in the future will be profitable or will equal the investment performance of the securities discussed herein. 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.