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Market Risk As Indicated By SPY And XLF, January 20

Jan. 20, 2021 10:26 AM ETSPDR® S&P 500 ETF Trust (SPY), XLF
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Financial statement trends, Software Developer

Seeking Alpha Analyst Since 2014

Risk Research provides two research services for private equity firms, institutional investors and family offices. Both are based on a combination of proprietary software and traditional Graham and Dodd analysis. 

1. Investigative due diligence into factors that determine risk and reward for corporate acquirers, private equity firms and family offices. (www.riskresearch.info)

2. The Dividend Investor Risk Report. Our passive investment portfolio focused on quality dividend payers. We identify companies likely to increase their dividend based on free cash flow trends and dividend history. (www.dividendrisk.com).

Sold FB this morning at $267.11. The Algo-indicated sell at price was $262.50. This position was entered Nov 23 at $265.28. Sometimes the Algo will indicate a Sell At price slightly above or below the original purchase based on its assessment of volatility and pattern recognition probabilities. Based on experience, I rarely ignore these signals regardless of the profitability of the position.

Nothing else is currently within one percent of the indicated Buy At or Sell At prices.

Today's charts, the hourly prices of SPY (the S&P 500 ETF) and XLF (large banks and insurance companies including Berkshire Hathaway) since December 7.

The Algo-indicated SPY Sell At price is $388.84. The current SPY price is $382.15. The Algo-indicated Sell At for XLF is $32.19 versus the current $30.88. Two weeks ago XLF was trading above its Algo-Indicated Sell At (then just above $31) and has sold off a little since. XLF often is weak before a decline in SPY given that it is a barometer of the financial sector. In 2007, XLF peaked a couple of months before SPY if I remember correctly.

We are approaching the point of inordinate market risk. Should SPY rise above its Sell At price, which changes throughout the market day, we'll consider reducing our portfolio risk.

SPY Since Dec 7.pngSPY: Source TD Ameritrade

XLF Since Dec 7.png

XLF: Source TD Ameritrade

Analyst's Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

We offer this research as insight into what we do in our own portfolio rather than as a recommendation or offer to buy or sell securities. This research should not be your sole source of information. It is based on probabilities, not certainties.

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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