Bought on the pullback as planned

Last Friday, I put some extra cash to work after observing that the S&P would satisfy the criteria that I had detailed in my prior post for a positive RSI divergence.  I purchased additional dividend stocks and Apple for my tech holdings at an entry point of S&P 2715.  I still believe that the market will maintain a positive bias until at least Spring of 2019.  If necessary, I'll update my blog this weekend and speak to any changes to my macro indicator.

New entry points

The market failed to gain traction this past week so I'll be looking again for two events that would support "buying on the dip."  I would need to see the S&P 500 exceed the low of 2628.16 on the downside and close at or above 2658.71 on Friday.

Short-term bottom might be forming

As I mentioned in my last post, I would be looking to add to my positions if the S&P 500 formed a weekly (positive) RSI divergence.  One of the two requirements for this divergence was met today with a low below 2710.51 (specifically 2691.43).  With this low in place, the market would need to close at or above 2766.70 on Friday to form the positive divergence.  If the market looks like it will satisfy this final criteria going into the close on Friday, it could represent a good buying opportunity.

Update - So this is where we're at

As I mentioned in my last post, I would put surplus cash to work if the S&P 500 forms a weekly RSI (positive) divergence.  I would be looking for signs of this next Friday.  A positive divergence would occur if during the week (1) the S&P penetrated the low of this week (2710.51), and (2) closed the week at or above this week's close of 2767.13.  If the market forms a "V" bottom without a positive RSI divergence, I will not chase the rally.  I much prefer to put money to work when technical "basing" patterns are formed.

In regard to longer-term projections, my macro indicator is again weakening -- it has turned down again after "trying" to form a new high.  See image -

The indicator's current value is 204 and would need to go below -20 (the red line) before I would call a market top.  If the indicator continues to fall to this level, I would anticipate a top around April of 2019.  In my view, it's way too early to be overly defensive.

As usual, I'll update this blog if I take any action and or change my outlook.

No changes to investment outlook

Despite the pullback the market is experiencing, I'm not taking any actions.  In fact, if the chart for the S&P500 forms a weekly RSI (positive) divergence, I will likely invest surplus cash in stocks I currently own.  In order to observe such a divergence, I would need to wait until Friday for the weekly close.  If I decide to add to my positions, I will post an update.

Just not happening -- Staying the course

Because of all of the negative news about a possible recession, I thought I would publish a market update.  My macro indicator (which tracks institutional fund flows) peaked on May 8 and began a gradual descent.  However, in late June, it hit an intermediate low and now it appears to be attempting a new high.  So in a nutshell, the risk that we might see a market top in May of 2019 is weakening -- If a recession is on the horizon, institutional traders aren't yet worried.  If my indicator makes a new high in upcoming weeks, it would mean that we wouldn't see a possible market peak until the Fall of 2019 at the earliest.  I will publish an update if this happens.

Fully invested but what might be ahead

The intermediate and long term bias is still positive according to my macro indicator.  Over the last several weeks, however, my "macro" chart has plotted a possible peak which could portend a peak in the US markets on or about May of 2019.  I say that a peak is possible because the indicator is stuck in a tight range but it has yet to turn down.  For this reason, I feel comfortable being fully invested for now.

Wowed, but not worried

Despite the market correction today, I'm not concerned.  However, as I've mentioned in the past, 10% corrections are normal.  My macro indicator continues to exhibit strength so I'll be looking for opportunities to deploy accumulated cash once I see RSI divergences in the charts.