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S&P 500 Weekly Update: The 'Bull' Makes An Appearance As Equities Break Out Of The Trading Range


  • Recession talk is ramped up over the latest manufacturing report. Don't over react; we've seen this before.
  • A tale of two economies - Manufacturing negative, and services positive.
  • Global economic data shows stabilization with a lean to slight improvement.
  • Interest rates and geopolitical headlines continue to rule the price action.
  • Looking for a helping hand in the market? Members of The Savvy Investor get exclusive ideas and guidance to navigate any climate. Get started today »

"The single greatest challenge you face as an investor is handling the truth about yourself." - Jason Zweig

Is the market going to go up or down? What about the economy? What’s the Fed going to do in the remainder of 2019? Will the administration tone down the rhetoric against China or ramp things up? There is ALWAYS uncertainty when it comes to the market or the economy, but it’s hard to remember a time when uncertainty levels were this high.

Then again it may me more about how investors perceive the situation around them than actual reality. I continue to convey the message that “the worry” should be that we simply talk ourselves into a dire situation. Sound ridiculous?, I think not.

Ever since early August, investors are being whipped around by a series of contradictory tweets, headlines, and "reports". One day the trade war with China is at the point of no return. The next day the two sides are talking. It was only a couple of days ago that a peaceful solution to the protests in Hong Kong was almost out of the question. By Mid week, everything was copacetic as Hong Kong CEO Carrie Lam withdrew the extradition bill that caused all the protests in the first place. On some days, Consumer Confidence, Retail Sales, Jobless Claims, etc suggest that a recession is out of the question, but then the next, reports like the ISM Manufacturing sector fall into negative territory.

Considering the wild volatility in August, the major stock indexes don’t look all that bad. Since Memorial Day, the S&P 500 has rallied over 7% and is on pace to record its fourth consecutive year of positive summer returns, the longest streak over the last 20 years. Yet the "feeling” among investors is the complete

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This article was written by

Fear & Greed Trader profile picture

Fear & Greed Trader is an independent financial adviser and professional investor with 35 years of experience in all market conditions. His strategies focus on achieving positive returns and preserving capital during bear and bull markets and he has a documented track record of calling the equity market correctly for the 10+ years.

He is the leader of the investing group The Savvy Investor where he focuses on sharing advice to help investors avoid the pitfalls that wreak havoc on a portfolio during bear markets. Features of the group include: Macro updates 7 days a week, ETF selections, covered call writing strategies, and live chat 24/7. Learn More.

Analyst’s Disclosure: I am/we are long I AM LONG EVERY STOCK/ETF IN ALL OF THE SAVVY PLAYBOOKS. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

My portfolios are ALL positioned to take advantage of the bull market with NO hedges in place. This article contains my views of the equity market, it reflects the strategy and positioning that is comfortable for me. Of course, it is not suited for everyone, as there are far too many variables. Hopefully it sparks ideas, adds some common sense to the intricate investing process, and makes investors feel more calm, putting them in control. The opinions rendered here, are just that – opinions – and along with positions can change at any time. As always I encourage readers to use common sense when it comes to managing any ideas that I decide to share with the community. Nowhere is it implied that any stock should be bought and put away until you die. Periodic reviews are mandatory to adjust to changes in the macro backdrop that will take place over time.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (236)

Have not sold or bought $XLV stocks recently. Saw this **News Report** and have to wonder how this pans out in the Market with Donkeys and Elephants claiming the moral High ground while needing an optometric examination to assure they see the forest fore the trees. (www.nbcnews.com/...) . . . , Beside asking the China Fentanyl Problem, one must ponder, Are you Pro? or Antibiotic? . . . , China, China, China, . . . , Where's Marcia?
Folks, have you heard our Pharma is sub-contracted to Chinese Mfg.? Another FDA warning on OTC drug(s) and prescription Heart Blood Pressure meds with Carcinogen. Hey, is the Regulator testing Sleeping Pill Meds? And letting four years of contaminated drugs into our Feedstock? (www.bloomberg.com/...) Bloomberg isn't passing on Fake News. Are they? . . . , Long $MRK, $BAX, $AMGN, $SBUX
John Zak profile picture
Courtesy of SentimenTrader, the Dow completed a rare price condition today that has had 18 prior occurrences since the end of the Great Depression with a historically favorable 6 month risk reward outlook with all 18 prior occurrences having gains.

JC ROCHESTER profile picture
@Fear & Greed Trader,

Some happy updates to report. :)

The following 3 sectors have already scored all-time highs as of the close today (2019-09-11)

FSELX (Semiconductors) YTD +40.1% gain
FSHOX (Housing & Construction) YTD +36.5% gain
FSRPX (Retailing/Discretionary) YTD +25% gain

All major indices are expected to follow suit soon to yet more all-time highs. :)
Fear & Greed Trader profile picture

thanks for the update 👍
BlueSkyForever profile picture
Observations on the trade/tariff situation: Trump has delayed the Oct. 1 tariffs to Oct. 15th. From what I've read, China is getting very worried about the number of US companies that are moving their production out of China, because they don't want to be located in a country that is putting their business at risk. Another angle is that it is very bad for their business to have all their supply/production done in one country - that is too risky, regardless of US tariffs on China imports. It looks like many US companies will be exiting China, which IMO is really good. Even if all the tariffs go poof tomorrow, US companies now realize it is not in their best interests to get all their supplies from China. Having a diversified input model would protect their business in the future. This is really good news - except that manufacturing will very likely not return to the US. Viet Nam, Mexico, and many other countries will be the greater beneficiaries.

The US stock market is not tied to just how the economy in the US is doing. Keep this in mind before dumping your international stocks, like WMT, MCD, COST, CAT, NIK etc. A diversified portfolio could very well weather the coming recession (which might be a very mild one) just fine. No need to go all cash. You just need some cash, maybe dividend income is enough - to weather the storm. I also keep some extra cash, for emergencies and for taking advantage of any really big market dip.
BlueSkyForever profile picture
This has been my best year investing ever. Currently up close to 24%, and it looks like the market will be going higher. Not sure if I will trim positions, at least not until October. It's a gamble, because if there is a trade deal - or progress towards a trade deal - then we could go higher yet. OTOH, it could come crashing down if no deal is reached, or worse, the negotiations are canceled. So far, that recession....does not seem as imminent. This is why I like to stay in the market, collecting dividends, plus having some cash to take advantage of bargains.

My latest REIT buys, WPG, SPG, MAC are all doing well & paying dividends. WPG is up 26%, and in a few days the first dividend will be paid. TXN, LRCX, AVGO, PFPT, also up & have greatly contributed to my portfolio gains. MU is on a tear, so not far from getting back to even.

Although V, SBUX and some others are down in the last few days, the other stock gains are more than making up for the losses. It might be a good time to pick up V if it is not in your portfolio, but wait until it stops dropping. Rotation from growth to value stocks is occurring now.

Good luck to all, may all your investments be profitable.
Fear & Greed Trader profile picture

thanks for sharing your positioning

you continue to play this bull market like a violin

Congrats 👍
Michael Clark profile picture

Steve: I particularly liked your comment on a lot of bad news potentially being priced into the market. The non-stop incessant recession chatter, defensive industries etc lead me to believe that a lot of bad news is already priced in. Sentiment in particular. You have to wonder what this market will do if folks come to realize the world is not ending. Thanks for another great update -Mike
Fear & Greed Trader profile picture

thanks for sharing your view.. this mkt has had a lot thrown at it and is near all time highs

IF we ever start to see mean reversion in all of the defensive positioning that is currently in place today, it will be a tremendous tailwind for the overall mkt.
bobholt profile picture
Thanks for the data rich and informative article.

There is a great article at the back of this week's Barrons. It cites the fact that reducing interest rates below 0 has not really stimulated EU economies and the clear economic trend is down. (Crazy is doing the same thing over and over and expecting different results.) It theorizes that the only solution to the coming recession/depression is increasing interest rates and adding a huge amount of infrastructure and other gov't spending worldwide. Visit your local library and check it out. It's really quite interesting, especially to be appearing in Barrons.
Fear & Greed Trader profile picture

thanks for offering your views on the markets
Michael Clark profile picture
@Fear & Greed Trader
Impressed with how gracious you are with your audience. Very impressive.
Fear & Greed Trader profile picture


however, at times i do have my un gracious moments 😊😊
JC ROCHESTER profile picture

Update on the Bank sector. :)

My sell order for DPST was filled at $38.7 on account of [R5, +1.5ATR, EMA50], netting a modest gain of +15.2 in 1 month (+182% annualized), having bought it at $33.6 (posted Aug 7, 2019. 12:33 PM time-stamped)

Residual upside is limited from here as DPST remains in deep PPO- state.

Just another normal, nondescript "sow and reap" operation.

My trend following strategy for small caps went long today, confirming the new uptrend. I imagine there will be a few red candles to blow off steam and then onward and upward. If not, maybe we'll get another great short coming soon like 2018 Q4 ;-)
JC ROCHESTER profile picture

Since R5+ is not yet achieved after X-up for Small-caps (e.g. $RUT), I envision a couple more up days forthcoming.

However, its EMA200 resistance (1535 at present and ▼) would be a formidable hurdle to overcome on the closing basis upon 1st test.

The most optimistic upside target in the next few days is +k(inner) ►1542 at present and ▼, with PPO- still in effect.
This is where I would lighten up on my Small-caps holdings (e.g. FSLCX).

I am leery of Small-caps on account of the recent bearish wOX-, suggesting very limited upside from current level.
JC ROCHESTER profile picture

More happy update on China shares. :)

Following CHIQ recently, CWEB is on pace to stage OX+ of its own by the close today (2019-09-09).

I will look to enter CWEB soon upon retracement to EMA50/EMA20 support, especially in concert with R5<50.
Fear & Greed Trader profile picture

i continue to be LONG China

for a variety of reasons 😊
Michael Clark profile picture
I'M BEARISH CHINA for metaphysical reasons. Too involved to discuss here.

Asia is going to sleep. As the West "went to sleep" from 2001-2019.

When the West is awake, the East is asleep. And vice versa.

That is good news on CWEB. Also, I see it went wX-up!

What limit price would you put in for tomorrow? I was thinking +1ATR because that is above K+ . . . .

More good news: Sold my batch 3 of GUSH today for a 23.6% profit. I purchased it on 2019-8-23, which was the X-up that reversed. No harm!

Unfortunately, my other batches of GUSH pretty far are underwater. Seeing GUSH wX-up would be great, and we are lot closer to that today than we were yesterday.
JC ROCHESTER profile picture

Hope you have managed to lock in some gain earlier today (2019-09-09) from the highest-priced batches of TQQQ at or above Friday's close,
as cautioned last week that while PPO-, NDX cannot stay in R5+ zone for more than 3 day, therefore making today a must-sell.day. :)

You can always re-enter later at a more low-risk level (e.g. R5<50, EMA50/EMA20), thereby further reducing your cost basis.

Per your guidance, I sold one of my 3 batches of TQQQ today on account of {R5+, PPO-}. The batch was bought on 2019-08-02 @61.32 and sold @64.52.

As you so expertly predicted, R5+ lasted exactly no more than 3 days while PPO-.
JC ROCHESTER profile picture

Congratulations on your nice gain from TQQQ. :)
Any profit is a good profit.

An ADD-900 day would be the earliest signal to re-enter when R5<50 is in effect at the close.
Otherwise, only extreme moves such as ADD-1800 or -2ATR decline intra-day would rouse my fingers into action.


Treasuries sector appears to be hard-coded in professional algorithm trading routines to move opposite to equities.

Accordingly, I locked in gains from TMV (3X bear Treasuries) at $10.56 after-hours today (2019-09-09), on account of [R5+, EMA20, +1.5ATR],
netting a modest gain of +11.2% in 3 weeks (+186% annualized),
having bought it at $9.5 (posted Aug 15, 2019. 02:47 PM time-stamped).

Bear ETFs are treacherous for holding too long so I always make sure I never over-stay my welcome. :)

Congrats on your nice profits.

I have not dabbled in bear ETFs yet, and it doesn't seem like I will be doing it anytime soon. I'll leave it for the professionals :)
Ian Farbrother profile picture
Hi FGT - and once again many thanks for yet another excellent overview of the week that was.

SO annoying. Managed to once again accidentally close the page when I was mostly done with the post but was just checking for a few things to close it out. Now have to attempt to reproduce it ... sigh ... so here we go ...

It was a rather good week for me. Up 3.61%, and Tuesday at 2.58% was easily my best day of the year so far. So my tinkering with the portfolio over recent weeks seems to be working rather well ;-)

Trying to keep roughly the same balance in the portfolio, so when I buy something I am immediately looking for something to sell. Fortunately, I still have WAY more things on my 'want to buy' list than I have room for in the portfolio. Always a good position to be in ;-)

Tuesday was only down 0.25% thanks in large part to my REITs and Staples. Managed to get a good roll in on VRSK. Bought an October call in TSM.

Wednesday got a good roll in on AMAT. Bought a September call in FCX, and swapped my V stock for a Jan call. That V call is now up 12% ;-)

Thursday sold CHD call for an unfortunate loss after a short seller came out with a highly negative report. I don't tend to take those kinds of reports too seriously, but given my long wish list, don't find it worth the hassle to keep a position that is being challenged.

Bought SYK, and also got nice rolls in on SMH and the FCX call from Wednesday.

Friday sold the TSM call from Tuesday for over 40% as it appeared likely to be failing at the top of its recent range. I call this a 'Steve Miller' move: "Take the money and run" ;-)

Also sold the rolled up FCX call on weakness for a modest gain in the overall position for the week. Sold AMD as it seriously under-performed the rest of the semis. Swapped NNN stock for a March call.

Honorable mentions this week go to: CBRE (call up 42% since I swapped into it on 8/26); MKTX (stock up nearly 16% since 8/9); NDAQ (call up 31% since 8/19) - and also ICE (call up 14% since 8/26); INVH (call up 25% since 8/7); ITB (call up 39% since 8/7); and finally CINF (call up 15% since 8/27). I have standing orders in for rolls on several of these and a few others.

In other news, the Najarians are rebranding and expanding. The Investitute has been renamed Market Rebellion (!!!) - and they are expanding the scope from just options to equities in general, cryptocurrencies, etc. Not much in the way of detail yet - but certainly bold and ambitious. Will be interesting to see how this all develops !!!

I'll leave it at that. Cheers and GLTA, Ian
Fear & Greed Trader profile picture

thaks for your update

patience with AMD , i dont think that move is over..

Owned CBRE all year, ups and downs, but now showing a nice gain
Ian Farbrother profile picture
Well, I don't usually comment during the week, but today was such a singularly gruesome day that I thought it deserved an exception !!!

'Singularly gruesome' when the worst major index (NDX) is only down 0.26%? Well - it seems as though the markets were specifically targeting almost everything I own except for the semis, REXR, KIE, and CBRE (the surprise star of the day).

Seriously bad were: AYX (down 15%), MKTX (down almost 12%), HEI (down 6.5%), IDXX (down 7%), SNAP (down nearly 8%), CSGP (down 6%), FICO (down 5%) and BLL (down 4%). Quite a few of these were amplified by being calls instead of stock. So it goes ...

Plenty of others down between 1% and just under 4%.

So whereas last week was particularly good, with Tuesday being my best day of the year, today was by far the worst day of my year - down just over 6% !!!!

What is most surprising is that there doesn't seem to be any significant technical damage. For now, uptrends are still intact. So apart from tinkering around the edges I didn't do a whole lot. Will most likely do more tomorrow if the carnage continues, but will wait and see what happens. IF we get a strong rebound, I will most likely buy short-term calls.

Wish I had thought to buy short-term puts early in the day on AYX. Would have helped a lot - but I've literally never seen anything quite like this before, so simply wasn't prepared.

One interesting clue to the action - apart from IGV (software), SKYY (cloud), the payment processors, and defense - was that USMV (minimum volatility ETF) was down from early on in the day when all of the major indices were still up. It ended down 0.82%. Very surprising !!!

In fact, I added a second call on USMV today. Unlikely that it will lead a significant decline.

I'll leave it at that. Hope others had better luck !!!

Cheers, Ian
Fear & Greed Trader profile picture

mean reversion today

the 50 stocks in the S&P that were up the most YTD coming into today were down an average of 1.45% today. The 50 worst performing S&P 500 stocks of 2019 coming into today were up an average of 3.37% today.

Basically the bottom half of the S&P in terms of YTD performance exploded higher today, while the top half lagged badly.
Great News, . . . , Sort-of: www.cnbc.com/... . . . , Reminds me of my cousin who after marriage and trying to start a family, constantly hearing the news, Cousin Lucy is almost pregnant. I'll believe it when I hear the Cries of Joy from the baby itself. . . . , Long $XOM, $AMLP, $KMI, $OXY, $SLB, $SBUX
Kimmeastar profile picture
I just spent a week in Jackson, Wyoming and it was a PLEASURE to not hear the news of any sort! I see nothing has changed now that I have returned. Keep up the good work, My friend! F> RULES!! :)
Fear & Greed Trader profile picture

THanks and welcome back 😊
Hi FGT, another interesting read this week, always appreciate "the facts" combined with insightful commentary.

However ... I feel compelled to offer a PSA on hedging after noticing these comments ......
> "One day the notions to put hedges in place look like the work of a genius, the next, not so much."
> "... a positive tweet or the 2/10 treasury spread steepening takes the hedging crowd to the cleaners in a matter of hours."
> "Monitor, assess, then reassess. Following that strategy has kept me “long” equities with no hedges in place."

It is helpful to differentiate between people who approach hedging as unprepared amateurs, versus those who prepare by learning, backtesting and planning.

Prepared - start hedges with a clear catalyst and backtested plan
Amateurs - start hedges based on emotion and gut feel

Prepared - take profits as market drops
Amateurs - sit and wait for market to drop indefinitely

Prepared - like when market recovers as protection $ turns into profit $
Amateurs - always defeated when market recovers

I agree with you that the "average investor" won't commit the time or focus needed. But the "above average investor" deserves balanced information. For the first 20 years of my investing career I heard that hedging was dumb because over time and distance markets go up. Unfortunately that mentality kept me on the sidelines way too long. Portraying hedging as always dumb is like telling people that because many small businesses fail, no one should ever start a small business. Just like with small businesses ... people who prepare themselves, start small and manage risk have a shot at something really worthwhile. I think that's smart for people to consider.

Good trading !
Fear & Greed Trader profile picture

thanks for your opinion on hedges,,

one look at the August chart of up and down moves that was posted in the technical section reinforces my view on hedging.. 😊

u help prove my point .. the 'average' investor cant handle it mentally

Yes, August was great for hedging !

Having captured a 14+ point move from SPY 297 to 283, the SPY holdings are much improved. To put that in perspective, if SPY were purchased on August 1st at 297, and hedged as I detailed thru the month, it would be worth ~312 as of Friday's close !

It's easy to see the value of having hedged in August :)

Good trading !

Meant to add that I agree that the "average investor", who can't commit the time or focus, probably shouldn't just dabble in this space.

Good trading !
I remain neutral as DOW is still in the trading band not breaking out yet. While transport and Russell 2000 is still in correction.
Michael Clark profile picture
I agree FTG. Correction is over.

soldiWizard profile picture
Earnings growth, while lack luster at 4% isn’t too different for what we saw in 15’. If you take a looks a Yardini’s squiggles this year doesn’t look too different from pre ‘trade war’. Estimates tend to come in.

Interest rates are going down. Wasn’t this the same thing that happens in ‘16 brexit . Some ‘EU’ money is craving yield right now.

Lowe interest rates -> higher PE . Is there any alternative to invest in ?
Fear & Greed Trader profile picture

excellent observations
Ciovacco just released his weekly video, he does not see an imminent recession. You can find this video here:


All the best
NotARetiree profile picture
Recession already here. The MFG recession of 2019:

U.S. manufacturing is in a recession. What does that mean for the rest of the country?
12 over profile picture
@HighYieldKing, It doesn’t mean much, apparently. From your own source, "Manufacturing has not shepherded the bulk of U.S. economic activity for many years now — we can still have a relatively healthy U.S. economy if the service sector continues to do well," Hamrick said. Plus several other paragraphs from the same source.
NotARetiree profile picture
Yes that's right. We are to expect both Trump and Powell to completely abandon the mfg employee losing their job. It is likely to impact Trumps chances of being re-elected. And with Biden leading comfortably in the polls, don't expect market viewing favorably of a Biden presidency.

Here is the growing list of layoffs:
12 over profile picture
@HighYieldKing, With respect...you need to read the reasons these companies are laying people off. Streamlining, cost cutting, etc. The refinery in Philly that blew up...well...duh. Companies that are consolidating to reduce costs, is not a Trump factor. There were plenty of lay offs during obama’s years. The jobs report still shows jobs added to the economy. Just saying...
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