Current position for Active portion of portfolio: SELL – S.T.A.Y. Plus™

Does this mean the end of the bear market?

Last week the market did break through a long-term downtrend line to the upside.  The question is will this be a successful breakout that leads to a continued uptrend or a failed breakout that leads to the continuation of the long-established downtrend?  Only time will tell if it is able to hold above this 12-month long downtrend line.  The rules in drawing a trendline is that it has to start with the high point and connect to at least one additional lower high.  If it works that a downtrend is supported by more than one lower high it just makes it a more established downtrend line.  Take special note of the Market Quiz which deals with an example of a downtrend line that was penetrated through to the upside.  We will keep an eye on this situation and keep you posted.

Check out the updated charts below and continue scrolling down to review reports from previous weeks.
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Revisit the "Market Quiz" post to see how our current situation compares to the build up and crash of 2007 & 2008 by clicking HERE.

Current position for Active portion of portfolio: SELL – S.T.A.Y. Plus™

​So far today (1/23/2023), the market is breaking through the long term downtrend line to the upside.  The question is will this be a successful breakout or a failed breakout.  Only time will tell if it is able to close and hold above this 12 month long downtrend line.  The downtrend line is coming in to today at about 4010 and the high today so far is 4033 which is about ½% above the yearlong trendline.  We will keep an eye on this and keep you posted.

Check out the updated charts below and continue scrolling down to review reports from previous weeks.
​
Revisit the "Market Quiz" post to see how our current situation compares to the build up and crash of 2007 & 2008 by clicking HERE.

Current position for Active portion of portfolio: SELL – S.T.A.Y. Plus™

Downtrend Continues into 2023 with lower highs and lower lows.
2022 ended the worst stock market since 2008. Further, 2022 saw the worst Bond price drop in one year, ever.  Bonds which, in the last 50 years or more, have served as the “safety net” for portfolios in down markets were down over *27% (*BLV, Vanguard Long Term Bond Index Fund). The safety “rule of thumb” implemented by age targeted funds (over half of all 401k investments) was to hold the percentage of bonds in your portfolio that matches your age, so that the older you get, the safer your portfolio is, i.e. 60 years old, 60% bonds, 70 year old, 70% bonds, etc.  This rule of thumb was extremely devastating to buy and hold portfolios this last year, particularly for the older investors. 

Following that was the Nasdaq down -32%, followed by the S&P500 at -18%, followed by the Small Caps at -16%, followed by the Midcaps at -13%.  Making the average of the four equity indexes a -20.32% for the year, which makes any mixture of stocks and bonds in a “buy and hold” portfolio a very dangerous bet for 2022 and likely for 2023 as well.

There were four bear market rallies of various sizes last year, each of the counter-trend rallies retraced about 50% to 61% of the previous decline. Although some of these rallies, like June-July and Oct-November, in a Bear Market can be quite impressive, we are still in a definite downtrend when we continue to have lower lows and lower highs with elevated levels of volatility in both directions which persisted all year long.  I would draw your attention to this week’s daily and weekly charts.  The green line that is drawn from the all-time high of 4819 at the beginning of 2022 and drawn in line with the peaks of each of the larger counter-trend rally is a great visual of the downtrend. So far, this year has been a “text-book” example of the definition of a downtrend – Lower Highs and Lower Lows.  Therefore, we are going to stay invested in the inverse of this downtrend until the data proves otherwise.  Furthermore, all three of our monthly indicators are still significantly negative, so we are still in a solid SELL signal.
​
Having been out of equities (stocks) since 2/23/2022 and then removing bonds going to ALL-CASH since April 11th, August 16th, we engaged the first element of the S.T.A.Y. Plus™ strategy, the equity inverse funds. Since then, the market has been down about 19% at its lows. This is exciting when markets have been moving down, the S.T.A.Y. Plus™ portfolios were moving UP!  Of course, during bear market rallies the opposite is true, however, as long as we continue in a downtrend the inverse should again serve us well in the intermediate to longer term time frame.  We also are scaling in the first application of the second phase of the S.T.A.Y. Plus™ strategy.  We will keep you posted on those results in future reports.
SEE GRAPH OF LAST MONTH AND Read about  S.T.A.Y. Plus™ strategy below.  

​Also, of historical significance, we are continuing to see the pattern of 2007/2008 play out... click here to revisit the market quiz post with updated charts depicting this.

Current position for Active portion of portfolio: SELL – S.T.A.Y. Plus™

​2022 ended the worst stock market since 2008. Further, 2022 saw the worst Bond price drop in one year, ever.  Bonds which traditionally for over the last 50 years or more have served as the “safety net” for portfolios in down markets were down over *27% (*BLV, Vanguard Long Term Bond Index Fund). The safety “rule of thumb” implemented by age targeted funds (over half of all 401k investments) was to hold the percentage of bonds in your portfolio that matches your age, so that the older you get, the safer your portfolio is, i.e. 60 years old, 60% bonds, 70 year old, 70% bonds, etc.  This rule of thumb was extremely devastating to buy and hold portfolios this year, especially for the older investors. 

Following that was the Nasdaq down -32%, followed by the S&P500 at -18%, followed by the Small Caps at -16%, followed by the Midcaps at -13%.  Making the average of the four equity indexes a -20.32% for the year, which makes any mixture of stocks and bonds in a “buy and hold” portfolio a very dangerous bet for 2022 and likely for 2023 as well.

There were about four bear market rallies of various sizes last year, each of the counter-trend rallies retraced about 50% to 61% of the previous decline. Although some of these rallies, like June-July and Oct-November, in a Bear Market can be quite impressive, however, we are still in a definite downtrend if we continue to have lower lows and lower highs with elevated levels of volatility in both directions which persisted all year long.  I would draw your attention to this week’s daily and weekly charts.  The green line that is drawn from the all-time high of 4819 at the beginning of 2022 and drawn in line with the peaks of each of the larger counter-trend rally is a great visual of the downtrend. So far, this year has been a “text-book” example of the definition of a downtrend – Lower Highs and Lower Lows.  Therefore, we are going to stay invested in the inverse of this downtrend until the data proves otherwise.  Furthermore, all three of our monthly indicators are still significantly negative, so we are still in a solid SELL signal.
​
Having been out of equities (stocks) since 2/23/2022 and then removing bonds going to ALL-CASH since April 11th, August 16th, we engaged the first element of the S.T.A.Y. Plus™ strategy, the equity inverse funds. Since then, the market has been down about 19% at its lows. This is exciting when markets have been moving down, the S.T.A.Y. Plus™ portfolios were moving UP!  Of course, during bear market rallies the opposite is true, however, as long as we continue in a downtrend the inverse should again serve us well in the intermediate to longer term time frame.  We also are scaling in the first application of the second phase of the S.T.A.Y. Plus™ strategy.  We will keep you posted on those results in future reports. 

​Also, of historical significance, we are continuing to see the pattern of 2007/2008 play out... click here to revisit the market quiz post with updated charts depicting this.

Current position for Active portion of portfolio: SELL – S.T.A.Y. Plus™

Bear Market Continues into 2023
This last year's stock market was the worst performing since 2008. Further, 2022 saw the worst Bond price drop in one year, ever.  Bonds, which have traditionally served as the “safety net” for portfolios in down markets, were down over 27%* (*BLV, Vanguard Long Term Bond Index Fund). The safety “rule of thumb” implemented by age-targeted funds (over half of all 401k investments) was to hold the percentage of bonds in your portfolio that matches your age, so that the older you get, the safer your portfolio is (i.e. 60 years old, 60% bonds, 70 year old, 70% bonds, etc).  This rule of thumb has been extremely devastating to "buy and hold" portfolios this year, especially for the older investors. 

In addition, the Nasdaq was down -32%, followed by the S&P500 at -18%, followed by the Small Caps at -16%, followed by the Midcaps at -13%.  Making the average of the four equity indexes a -20.32% for the year.  This made any mixture of stocks and bonds in a “buy and hold” portfolio a very dangerous bet for 2022 and likely for 2023 as well.

There were roughly four bear market rallies of various sizes last year, each of the counter-trend rallies retraced about 50% to 61% of the previous decline. Although some of these rallies, like June-July and Oct-November, can be quite impressive, none of them broke the downtrend because we continue to have lower lows and lower highs all year long. The updated daily and weekly charts continue to illustrate this.  See below.

Current position for Active portion of portfolio: SELL – S.T.A.Y. Plus™

Apparently Santa’s sleigh was too loaded down with “coal” to deliver a Santa Rally to the market, as last week the market had yet another decline, continuing to erase last month’s gains.  This most likely has signaled an intermediate top in the continuing downtrend pattern. There have been about four bear market rallies of various sizes so far this year, each of these counter-trend rallies has retraced roughly 50% to 61% of the previous decline. Although some of these rallies, like June-July and Oct-November, can be quite impressive in a Bear Market, however, we are still in a definite downtrend; we continue to have lower lows and lower highs with elevated levels of volatility in both directions, which has persisted all year long. 

I would like to draw your attention to this week’s daily and weekly charts.  The green line that begins at the all-time high of 4819 at the beginning of 2022 and is drawn in line with the peaks of each of the larger counter-trend rallies is a great visual of the downtrend. So far, this year has been a “text-book” example of the definition of a downtrend – Lower Highs and Lower Lows.  Therefore, we are going to stay invested in the inverse of the market until the data proves otherwise.  Furthermore, all three of our monthly indicators are still significantly negative, so we are still in a solid SELL signal. 

​Also, of historical significance, we are continuing to see the pattern of 2007/2008 play out... click here to revisit the market quiz post with updated charts depicting this.

Current position for Active portion of portfolio: SELL – S.T.A.Y. Plus™

Last week the market had another 2% decline, erasing the last 4 weeks of gains.  This most likely has signaled an intermediate top in the continuing downtrend pattern. There have been about four bear market rallies of various sizes so far this year, each of the counter-trend rallies have retraced about 50% to 61% of the previous decline. Although some of these rallies, like June-July and Oct-November, in a Bear Market can be quite impressive, however, we are still in a definite downtrend if we continue to have lower lows and lower highs with elevated levels of volatility in both directions which has persisted all year long.  I would draw your attention to this week’s daily and weekly charts.  The green line that is drawn from the all-time high of 4819 at the beginning of 2022 and drawn in line with the peaks of each of the larger counter-trend rally is a great visual of the downtrend. So far, this year has been a “text-book” example of the definition of a downtrend – Lower Highs and Lower Lows.  Therefore, we are going to stay invested in the inverse of this downtrend until the data proves otherwise.  Furthermore, all three of our monthly indicators are still significantly negative, so we are still in a solid SELL signal.

​See the last 12 months below on the weekly and daily candlestick charts of the S&P 500, followed by the updated charts of our balanced and aggressive portfolios.

Current position for Active portion of portfolio: SELL – S.T.A.Y. Plus™

Last week the market had about a 3% decline, erasing the last 3 weeks of gains.  This very well may have signaled an intermediate top in the continuing downtrend pattern. There have been about four bear market rallies of various sizes so far this year, each of the counter-trend rallies have retraced about 50% to 61% of the previous decline. Although some of these rallies, like June-July and Oct-November, in a Bear Market can be quite impressive, however, we are still in a definite downtrend if we continue to have lower lows and lower highs with elevated levels of volatility in both directions which has persisted all year long. 

I would draw your attention to the current weekly chart below (each candle stick represents a single week; red ones are down-weeks, green are up-weeks).

The green line that is drawn from the all-time high of 4819 at the beginning of 2022 and drawn in line with the peaks of each of the larger counter-trend rally is a great visual of the downtrend. So far, this year has been a “text-book” example of the definition of a downtrend – Lower Highs and Lower Lows.  Therefore, we are going to stay invested in the inverse of this downtrend until the data proves otherwise.  Furthermore, all three of our monthly indicators are still significantly negative, so we are still in a solid SELL signal.

For a more granular visual, see the daily chart below where each candle stick represents a single day.​

Having been out of equities (stocks) since 2/23/2022 and then removing bonds going to ALL-CASH since April 11th, August 16th, we engaged the first element of the S.T.A.Y. Plus™ strategy, the equity inverse funds. Since then, the market has been down about 19% at its lows. This is exciting when markets have been moving down, the S.T.A.Y. Plus™ portfolios were moving UP!  Of course, during bear market rallies the opposite is true, however, as long as we continue in a downtrend the inverse should again serve us well in the intermediate to longer term time frame.  We also are scaling in the first application of the second phase of the S.T.A.Y. Plus™ strategy.  We will keep you posted on those results in future reports. ​

Current position for Active portion of portfolio: SELL – S.T.A.Y. Plus™
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​What difference do you see between the two graphs below?  Both are 10 months of data and both have over a 20% decline from highest to lowest point of the graph. Both achieved a successful rally o f over 50% of the previous decline. (Updated through the week ending 1/27/2023).

Quiz Answer:  The chart on the right is our current YTD chart of the S&P500 updated through 1/27/2023.  The chart on the left is the same ten-month time frame from October 2007 to August of 2008.  Would you like to see the rest of the left side chart?  See Below:  That was the Bear Market of 2007 – 2008 with over a 55% loss.
Both charts show results for six weeks following the previous low.  In 2008 it went for three more weeks before the bottom fell out.  Therefore, we will soon know if history will repeat itself or not. 

Current position for Active portion of portfolio: SELL – S.T.A.Y. Plus™

Last week the market had another very small rally- about 1%. There have been about four bear market rallies so far this year, each of which has retraced about 50%to 61%of the previous decline. Although these rallies in a Bear Market can be quite impressive, we are still in a definite downtrend if we continue to have lower lows and lower highs with elevated levels of volatility in both has persisted all year long. I would draw your attention to this week’s weekly chart that shows last week’s rally achieved reaching the 61%(4006) retracement of the Aug 16th to Oct 14th decline with a high last week of 4034. The test this week was to see if this resistance area of 4006 holds or not. The week before last week this area was penetrated with an intra-week high of 4028 but was not able to hold and closed below the 4006 area at 3965, last week the market was able to close above it at 4026. So only time will tell if this week it can hold above that level in an effort to sustain the rally.