The S&P 500 rallied sharply yesterday on news that the Federal Reserve has become more dovish. However, the stock market was well positioned to begin a significant year-end rally anyway for these reasons:
- The S&P 500 successfully passed its retest of its October 29th closing low yesterday on Tuesday November 27th.
- The AAII investor sentiment survey’s bullish reading of 25.5% for November 22nd was the lowest since August of 2017. The bearish reading of 47.14% was the highest since January of 2016.
Based on the two above stock market bottom indicators firing off simultaneously the stock market would likely have rallied even if Federal Reserve chairman Powell had been hawkish in the speech that he gave yesterday. There is the potential for the S&P 500 to experience a memorable year-end rally.
The year to date chart below depicts successful retests for both of 2018’s crash lows for the S&P 500. After hitting an all-time high in January of 2018, the index crashed to a low of 2581.00 on February 8th. The S&P 500 subsequently rallied and declined back to the February low on April 2nd and passed its retest by closing just above it at 2581.88. This happening was a very bullish technical indicator. It resulted in the S&P 500 establishing a new uptrend which took the index to new all-time high in September 2018. After crashing again and to a low of 2641.50 on October 29th the index successfully tested the low when it closed well above 2641.50 on Monday November 26th and Tuesday November 27th. The close on Friday November 23rd required that the index hold above 2641.50 for two consecutive day. The S&P 500 passed the test with flying colors.
To maximize upside in this highly volatile market I recommend a subscription to the Bull & Bear Tracker. Its Green and Red signals are utilized to trade two triple leveraged S&P 500, ETFs including the SPXL (Direxion Daily S&P 500 Bull 3X ETF) and the SPXS (Direxion Daily S&P 500 Bear 3X ETF).
Throughout 2018, the Bull & Bear Tracker’s signals have generated an average return of approximately 9% per month. The signals have had the highest productivity during 2018’s most volatile periods. For the October 4th to November 24th period, it generated a return of 7.0%. For the January 1st through April 9th period the Bull & Bear Tracker’s signals generated a return of 62.2%. As of November 25th, the Bull & Bear Tracker’s back tested and published signals generated a return of 96.4% compared to a decline of 1.6% for the S&P 500. For more about how the Bull & Bear Tracker operates and how its Red signal produces profits in a down market and Green signal in an up market read my article entitled “Bull & Bear Tracker Gorging on Market Volatility”. The table below provides some of the performance statistics for the Bull & Bear Tracker.
Subscriptions to the Bull & Bear Tracker are currently available for free. An automated alert and trade execution system is currently under development. Upon the development being completed subscribers will be able to have their trades automatically and seamlessly executed by an online broker. To subscribe click here.
Below are my October 2018 articles pertaining to why the market will be substantially lower in 2019:
- Amazon and Google cast daggers into heart of Bull, October 25, 2018
- Tariffs caused Crash of 1929 and will cause next Market Crash, October 23, 2018
- Nobel Laureate Shiller says Current Market is Eerily similar to late 1920s, October 4, 2018
- Frenzied Market Blow Off Underway, October 3, 2018
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