Wealth Watch

EXPECT EXTREME VOLATILITY FOR THE NEXT FEW WEEKS

MARCH 11, 2020

The markets are hitting support at the 2770 range on the S&P 500, and if the market holds, you can expect extreme volatility for the next few weeks-to-months trading around this area. If the S&P 500 does not hold at these levels, a re-test of the lows set in December of 2018 are the next probable stop, which would be around 2360 on the S&P 500.

SP

The buying yesterday was, in all probability, shorts covering their short positions and locking in profit. Just for clarification, when someone shorts a stock, they must borrow it from someone who owns the stock. If the market/stock drops, they make money, but the only way for them to lock in profits is to cover the short position, which requires them to buy the stock back. This can make for a big rally which usually does not hold. It is more of a fake rally than new buyers taking a position with the expectations that the market or the stock will move higher.

As you know, we dramatically reduced exposure to equites. If the market cannot hold and the HCM-BuyLine® drops a bit further, we will reduce exposure even more. Remember, commit to math not your emotions. This market will settle down, and we are well positioned to take advantage when the market bottoms and resets to a new uptrend. Until that time, patience is key.

The 401k Optimizer® and TSP Optimizer® subscribers were sent new allocations yesterday to reduce exposure to equites.