I expect to reduce some equity exposure based on seasonality trends in the next 1-2 weeks. However, that selling process will be limited to 10-15% of the equities we hold within the ValueTrend Equity Platform. A more serious sell signal is my hard and fast sell rule of “a lower low and break of the 200 day SMA”. This is something that I have discussed numerous times on this blog , and in one of my Investors Digest articles here.
What I’m trying to show you here is I have provided you, the good readership, with many sources to understand how you can create a disciplined methodology of selling. So there’s no excuse if the proverbial poop hits the fan on this market…right? You know what to do!
Let’s take a look at a short termed S&P chart and see what it will take for us to execute a significant sell strategy on our portfolios. As a quick review….My BUY and SELL rules on this weekly chart are simply:
- SELL if the last peak AND last trough are lower than the prior peaks & troughs AND there is a break below the 200 day SMA—and this condition remains in place for at least 3 days—bare minimum.
- BUY if the last peak AND the last trough is higher than the prior peak & trough AND the market moves above its 200 day SMA. Again—you need to see the break last for 3+ days.
Simple is beautiful, isn’t it?!
And now…the chart!
The current chart illustrates BUY and SELL signals for the past few years using the above rules. It shows us that, right now, the S&P is (barely) over its 200 day SMA – which stands at just over 2600 as I write. The price of the S&P has, since February, put in lower peaks BUT not lower troughs. The last trough in early April roughly met the February low—which stands at around 2580. So – no lower trough, no break in the 200 day SMA. Thus, we hold.
This ain’t rocket surgery, folks…
I will sell if the S&P 500 moves below its 200 day SMA AND takes out the 2580 level and that condition lasts for 3+ days.
Any questions? Post your comments below—I’ll do my best to answer them.
This blog is growing…thanks to you!
Recent statistics came out at 10,400 individual unique persons reading this blog (i.e. multiple viewing excluded). Just 2 years ago that number was a little over 3000—a triple! I started this blog about 8 years ago and I think the only readers back then were my wife, my two dogs (they’re really quite smart!), and a few clients.
Lets keep spreading the word. You know that this blog is not, and never will be a “ValueTrend commercial”. I write this blog to offer a valuable resource for opinions, education, and community discussion. You can feel good about recommending it to your friends. And you should know that commenting below will NEVER result in your email address being used to solicit or bother you – nor would it EVER be sold to a third party. That is NOT my way of doing things!!
Meanwhile—catch me on BNN next week. Call into the show with stock questions—mention that you read my blog when you are on the air—it helps me a lot!
Keith on BNN Televisions MarketCall Tuesday May 1 at 6:00pm
Keith appears regularly on BNN MarketCall to answer viewer questions on the technical analysis of stock trends, and to provide unique insights on the factors of technical analysis used in successful investment management.
If you have questions about the technical analysis of stock trends for individual stocks, be sure to phone in with your questions for Keith during these shows.
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