So after my last post in which I described the possible triggers that would cause me to dip my toes back into the water, the market popped on news that the ECB might implement stimulus measures. Oil prices nudged upwards as well. If the market closes above 1880 tomorrow, the S&P chart would carve out a basic RSI divergence. I say basic because the divergence would be created with only two weekly bars versus a divergence over several weeks, which would be a stronger positive signal.
I assessed the daily money flow indicators and they look pretty good. So what now? Before I get into my game plan, I wanted to share with you what's on my watchlist. Now don't fall asleep reviewing this list -- Yes, they are boring dividend stocks. Here are the tickers: MO, AEP, PPL, CVX, KO, CMP, DUK, EMR, LNT, FAST, GE, GIS, GPC, JNJ, D, PEG, PAYX, PM, PG, O, SO, SE, UPS, VTR, VZ, WFC, AND HCN.
Of these stocks, I would consider buying those that have weathered the storm well (i.e., exhibited good relative strength over the past 3 to 6 months) and those that are at or below fair value. All with the exception of the following would pass this test: CVX, CMP, EMR, FAST, GIS, PEG, PAYX, O, SO, UPS, VTR, WFC, AND HCN. I would feel comfortable with this approach given the potential for further downside. Executing this plan now would raise my equity exposure by about 20%. As far as the "alpha" or growth components of my portfolio, I'll likely defer purchases to see how the market behaves absent rumors about further stimulus by the ECB.
Follow signals from the Prophet4Traders system to identify turning points in the U.S. stock market
The purpose of this site is to share results of a trading system that I use for identifying both long-term and short-term trading opportunities. I take the time to do this because of my passion for investing and helping others succeed. The system helped me avoid the "Crash of 2007/2008" and every major correction since then. The cornerstone of my trading system are analyses of market liquidity to gauge longer-term market sentiment and equity and index options (put/call ratios) to identify short-term entry and exits.
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