Technicals Spell: BEAR

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

​I attended an interesting investment conference last week in Dallas, Texas, the National Association of Active Investment Managers.  One of the speakers shared an interesting technical phenomenon that has only taken place twice in the last 40 years that is happening again now.  The chart below shows a graph of this where the price of the S&P500 10-Month Exponential Moving Average (EMA), the red line, crosses below the 20-Month EMA, the blue line.  Currently the S&P500 20-month EMA is at 4019, and as of last week the 10-month EMA is at 4013. Note: this technical indicator is also referred to as the Exponential Smoothed Average (ESA), which is the same as the Exponential Moving Average (EMA), these terms are interchangeable.  You can see this in the monthly charts.  So far, the market is only showing a very slight cross-over, but if it crosses over to the downside in a more significant material way, according to past events this could spell a bear market equivalent to 2001 and 2008 which dropped over 50% in value.  Just another technical setup showing that the market is at a very precarious crossroad.  Time will tell, we will keep you posted.