O, sure, I spoke of Japanese Candlesticks for last Friday, Monday and Tuesday that suggested this recent rally was likely done, and that we could maybe “stick a fork in it.” Since then, we’ve been in considerable decline. But, I say, don’t sweat it… yet!
In keeping with the brand new feature I just began to include last month… this is still a Bull Market, and it will be until it isn’t! So, let’s just see what we have here: The 17 month simple moving average for the S&P 500 is at 1966.71, while it closed the month of April at 2,085.51. That’s just 6% below! And, should this bull be coming to an end here, we need to watch May, and see where this month might end, so as to consider whether the Bull market might be ending, and a new Bear Market ‘coming out of hibernation.’
As I previously wrote, the really big traders watch this indicator, and can get out within 10% of the top. Most recent weakness, on higher down-day volume may be some of them slipping out now, causing this present top. It remains to be seen.
Beyond that, I am updating my timer, and watching all my indicators. I am presently of a belief that we will “correct,” and that I hope to be able to discern the next low-risk market entry opportunity’ within this 6 year old Bull Market.
The price has only pierced its 50-day moving average. That’s not meaningful or significant. Only as it falls through its 200-day average, the 50-day rolls over, and it comes to fall through the 200-day average, and the 200-day moving average should roll over and turn down, should this become of any serious concern.
In the mean time, we continue to sit tight; watch and wait. We want a market correction. We want it to even decline through its 200-day average, and we want it to put all of our technical indicators into that place where they are signaling that market risk has been largely wrung out. What we really want is to be able to buy in at lower prices, where dividend yield will be highest, and we might even be able to acquire a share or two more than we might have otherwise, had we bought at higher prices.
Remember the goal. We’re in the control of growing a portfolio dividend income at an annual double-digit rate; harnessing compounding, so that we might further hasten the entire process. Market sell-offs that inflict a certain degree of fear and pain into the less focused and experienced is precisely what we would like to see, as that only helps us to attain unto our long-term goal of meeting our first-year, retirement income need!
Here’s to your successful investing!
Harold F Crowell