Market Recap

Last week I posted my Death Cross & a Test article and a few weeks before that my article on How Passive Investing Saved my Life. It turns out some of my readers found it useful so I decided to post a market recap from last week. I’m not sure how long I’ll keep these up but it’s fun to write about for the time being.

I don’t keep up on ALL the market gyrations but I’m aware that earnings season is coming and several companies are already ‘warning’ of possible misses. While some of that’s due to the Trump administration not know what they’re doing (tariffs, threatening to fire Chairman Powell, etc), some of it could be due to Bull Market exhaustion. Whatever the case is, I expect plenty of volatility going forward for the rest of January and even into February.

Market Rebound?

It looks like the S&P 500 (my main go to chart) is firming up. I look at the booth the weekly and daily charts and noticed that the daily chart is rebounding nicely from the lows in December. There appears to be some weakening happening in volume as it’s nearing the 50 DMA. Strong volume and crossing the 50DMA line is really important here. This is a wait and see.

S&P500 Daily Chart through 2019-01-11, market recap
S&P500 Daily Chart through 2019-01-11

I’m not overly concerned right now as the weekly chart in the S&P500 is still very positive but the price action is below the 50WMA line. Not a good omen if the price action stalls below it and we might see some stalling in the daily chart (above). Still, those white hollow candles and decent volume on the weekly chart makes me want to take a wait and see position.

S&P500 Weekly Chart through 2019-01-11, market recap
S&P500 Weekly Chart through 2019-01-11

I haven’t market timed or moved any money out of my retirement accounts. My mad money — aka small stock investments in my Brokerage account — is not doing so well. Meh. That’ll be a topic of another post soon.

Despite all this, I’m still long but I expect weakness going forward this year. That’s not bad, it lets me dollar cost average better in 401k.

ETF Pick of the Week

This pick of the week is mostly me remembering something from my past trading days. I really like ETF’s and I plan on rotating out many of my individual stock holdings into ETF’s over the next few years. I find that they’re easy for me to think about and keep track of.

This weeks ‘pick’ is EEM, the iShares MSCI Emerging Markets Index. Let’s look at the daily and weekly charts.

EEM Daily Chart through 2019-01-11, market recap
EEM Daily Chart through 2019-01-11

EEM just plain sucks on the daily chart. It had a death cross many months ago and has been riding the 50DMA average down ever since. While the recent price action since early 2019 is nice, it hasn’t broken above the last high beginning last December. If it does, then yeah I’d be watching it more closely. If it takes that high out and the high last October, while breaking above the 200DMA, then I’d consider buying.

Still, there’s so much craziness going on right now with the Trump Tariffs, Brexit, and whatever else you want to blame.

EEM Weekly Chart through 2019-01-11, market recap
EEM Weekly Chart through 2019-01-11

The weekly chart looks a bit better. The 50WMA is still above the 200WMA, a test of the 200WMA in late October 2018 and again in December 2018 held, so that’s positive, BUT the 50WMA racing toward the 200WMA is cause for concern. Weekly moving averages that make a ‘Death Cross’ are big deal for me.

Famous Last Words

Still long and Bullish overall, but very cautious. I’m keeping an eye on the S&P 500 and might buy EEM for my long term portfolio if it perks up more and the charts keep going from the lower left to the upper right.

Now, go out and do something fun.