After watching the markets head higher 4 weeks in a row, investors have to be wondering, “How long will it last?” Our weekly Stock Market Report answers that question to help you prepare for what’s next.
In our March 16th Stock Market Report the crystal ball told us:
“our Technical Analysis leads us to believe the indexes could rise to the next level or two of resistance, taking the S&P 500 as high as 875, maybe 900 by mid-April. From there, if history does repeat itself, the indexes trade sideways until late May and then head back to lows sometime in late June to early July. Just in time for 2nd quarter earnings releases.”
So far so good as we close in on our mid-April timeline. Meanwhile, the 3 models that make up our crystal ball all have their needles pointing at the bull. Last week:
- The Current Trend Line snapped up 45 degrees, right out of congestion.
- Our Momentum Model gained strength in 2 of 3 timeframes.
- The Market Leadership wagon continues to be pulled along by the NASDAQ.
But… we see a possible traffic jam ahead.
After looking at the S&P 500 chart, we can’t help but see a stop sign or maybe a flashing yellow down the road. On the way down, as you can see on the S&P 500 chart below, a whole lot of debris littered the index chart between 900 and 850. It’s our view that the index is going to have to clean that mess up before any of this bottom talk can be taken seriously.
Smart investors might think about hedging against the indexes backing up a bit. You know what they say about an ounce of prevention. The medicine that will best help you stomach a little stock market indigestion is an inverse ETF. Something like ProShares Short Dow 30 (DOG) would do the trick, and we promise it will taste good on the way down.
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