The S&P 500 has gone from an uptrend to a sidelines rating in one day! Folks, if you haven’t already, you need to get out of the market and move to the sidelines and the safety of cash.
Don’t get crazy and go short yet. We want to wait for a strong downtrend rating before we go short. But you should go to cash. Cash is awesome. Cash is safe. Cash is king. You want to be hunkered down in your sniper nest watching the other fools below battle it out. Let the bodies pile up on the battlefield. Then once a dominant group emerges, place your bets with that group.
Today’s reversal on the S&P 500 was significant today because it occurred right at the Fibonacci Retracement level of 61.8%. In otherwords, this may be the end of the bounce and the resumption of the larger downtrend.
From a seasonal perspective, especially when looking at what the S&P 500 did last year, everything makes sense. In 2011, the S&P 500 sold off in May at the start of the worst 6 months of the year. In June, a counter-trend took place that lasted about 3 weeks. In July, the downtrend resumed as the market ultimately fell to its year low at the end of July. This year, the exact same set up appears to be taking place.
For those of you who have signed up for JB’s Swing Trading service through me, have you noticed that JB isn’t texting you new picks right now? Again, this is another value of JB’s service because it means that the massive JB network of semi-professional traders who trade at home for a living, are not buying stocks right now but instead are sitting in cash and waiting for a pullback before taking any new positions. Knowing this is extremely valuable because it tells you that you shouldn’t be going long anything right now either.
In the video below, I’m going to show you the chart of the S&P 500 and why I think you need to close out your positions and move to the sidelines and the safety of cash if you haven’t already.