After hitting a yearly high on Tuesday, the market was walloped on Wednesday and Thursday. The NASDAQ Composite lost 2.56% over the past few days and touched the mid-January price level intra-day when it was down to 3118.61. Today, it closed at 3131.49 down 1.04%. Likewise, the other major market indexes also declined with the DJIA well below 14000 closing at 13880.62, and the S&P 500 closed at 1502.42 after touching 1497.29 intra-day. Whether or not this is the beginning of a deeper decline of 5% to 10% or a major correction of 20%+ we will have to wait and see.
Indicator #8 NASDAQ Summation Index and MACD finally capitulated today as the Index crossed over its 5 day-ema to the downside. (Refer to 2nd chart) This now confirms the earlier crossover of the MACD last week. Thus, this indicator is now on a SELL signal resulting in a Dashboard “1” SELL signal. Accordingly, the remaining three ETFs in the portfolio will be sold at the Friday market opening. Since two ETFs were previously sold this left 40% of the portfolio in cash prior to the market’s recent decline. Thus profits were protected in those securities or losses were minimized as the case may be.
We will now have to wait for the market to signal when the next BUY signal will be given. Patience is needed to ensure that our emotions do not take control of our investments. A full report will be provided in the upcoming weekend blog.