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How Bad Is The Market?

Dec. 04, 2021 10:38 AM ET
Jim Van Meerten profile picture
Jim Van Meerten's Blog
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  • Down to an 8% technical buy signal.
  • Down 6.42% in the last month.
  • 7.84% off it's previous high.
  • Trend Spotter Sell Signal.

The Barchart Chart of the Day belongs to the Value Line Arithmetic Index ($VLA).  This is an arithmetic index of the 1700 largest companies that is equal weighted  (these 1700 stock are about 95% of the entire capitalization of the US stock market).  Most of the other indexes are Market Cap weighted so larger companies skew the results.

This is a chart of the Value Line Arithmetic Index vs the Trend Spotter and the 20, 50, 100 and 200 day moving averages:

$VLAAs you can see the Market has been pretty much flat for the last 6 months but has now traded below its 200 day moving average.  For most EFTs the 200 day moving average is my stop loss and I wait until I see some upside to reinvest the proceeds from what I sold.

The next chart is the Value Line Arithmetic Index 90 day Turtle Channel including the Trend Spotter, 100 and 200 day moving averages.

$VLAJust another view that shows the Market has been pretty flat for the last 6 months until a slight upward blip in mid October and then downward almost to it's 90 day low point.

My opinion from reading these 2 charts is that this is a moment of caution not a moment to panic.  I'm personally keeping my moving stop losses in place - the 200 Day Moving Averages on broad based ETFs and the 100 day moving averages on individual stocks.  At the same time I will be selling any position that has a negative 3 month performance.  If something hasn't gone up in the last 3 months: why should I own it?

Please let your decisions be made on rational review of each position in your portfolio and not by any emotional panic you get from reading the media headlines.

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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