As planned, I reduced my equity exposure to 50% on an intra-day break of S&P 2058 on August 12. This has helped me weather the storm over the last week. Currently, my long-term portfolio consists of 50% cash, 40% dividend growth stocks, 5% Apple, and 5% SPY (S&P 500).
Despite the turmoil in the market, the liquidity contraction exhibited by the macro indicator that I follow isn't that pronounced (in my opinion). Historically, there's a pretty good correlation between levels of contraction and the extent of market corrections. Based on this correlation, I don't see a correction of more than 10-12% which is pretty customary and not a sign of a bear market. I'm not expecting any protracted moves lower than S&P 1875.
For re-entry into this market, I will be looking for a reversal that penetrates the trailing ATR3 stop and/or a bullish RSI divergence. I'll be posting specific levels in upcoming posts.
Although, the short-term is on most people's mind, I'm looking for the possibility of a more ominous correction sometime in the fall of 2016. It's still way too early to draw conclusions, however.
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.
This site is for information purposes only. Past performance of the trading system is not a guarantee of its future success. Please consider consulting a qualified investment adviser before making investment decisions.
