Today’s pause in US equity markets for the Juneteenth holiday offers an opportunity to take stock, observes Ian Murphy of MurphyTrading.com.
Last week’s action put the S&P 500 (SPX) in an ‘official’ bear market having declined more than 20% from the peak reached during the first trading week of 2022. From a market technician’s perspective that message is old news because a new bearish trend was confirmed on January 21 when the weekly bar of the S&P500 closed below its -1ATR channel (black arrow below).
Click the chart to enlarge
In terms of active investing, we received a signal to exit a pure-play on the US equity market on April 29 when the Tidal Strategy went back to cash, as mentioned in the May Newsletter. This was almost two months before the bear’s arrival was officially announced to the public.
As you know we have been attempting to build a Weekly Trend Following portfolio since the springtime in keeping with this year’s trading theme. Finding stocks that are moving to the upside in the middle of a bear market is not an easy task, so we must cut our losses quickly if things are not happening as they should.
The portfolio is totally back in cash since Friday afternoon as we wait for the next opportunity. We will review the equity curve of the account in Wednesday’s note when the Pfizer position has been settled, and there was also a dividend payment the previous week.
The next WTF trade might arrive sooner than expected as conditions are lining up for an entry on the Weekly Help Strategy. A possible divergence might be forming between the price of the S&P 500 and the Weekly Help indicator (pink arrow above). Stay tuned!
Learn more about Ian Murphy at MurphyTrading.com.