Its been a while since my last post showing danger ahead on Aug 31st. It seems that the market is confirming my indicator was correct and that so far we are showing strong signs that this is not a market that is safe to be long in right now. No one has a crystal ball, so I cannot say for absolute sure that we are indeed in a prolonged bear market. However, it certainly is following that line of sight so far. Until the CCI indicator is heading north and the 10 month simple moving average is crossed, I will be out of any swing trading or long term investments.
It is obviously my hope that is crashes and burns! As that is when all the best opportunities are. As famously stated by Baron Rothschild, an 18th century member of the Rothschild banking family, “The time to buy is when there’s blood in the streets.”
In saying that, it can be frustrating sitting on your hands and having your cash not make money, but the what if factor of missing a 2008 like crash makes it absolutely necessary to have the discipline to wait till it is safe.
In October, the Federal Reserve will meet again to decide if they will raise interest rates from record lows. Many say they will not raise them till 2016, but I have a sneaky suspicion that they will have to raise them this month. This will cause a lot of volatility in the market. The fact is, they should have done this months ago. I am no economist, but if we do crash and rates are at historic lows, it is one less tactic they have to bail the market out again, but it may already be too late for that anyway.
In conclusion, in my humble opinion, this market is not at a bottom yet, just how far down it will go I don’t know, but I believe that the S&P 500 will break below the August low of 1867 soon, possibly next week. In my estimation we will have a 20% correction, the current low was only about 12% so far. The month of October is going to tell us a lot…