Weekly Market Outlook

So far our weekly market outlook, a feature begun earlier this month, has proven accurate.

Today we offer a review and an updated outlook.


In our initial forecast, on August 10,  we wrote:

"We're today starting a feature which we'll call 'Weekly Market Outlook'.

Each weekend, more or less, we'll post what our outlook for U.S. equities is for the coming week(s).  This will be based purely on a statistical & technical trading system we've developed, the particulars of which we will not reveal at this time.

We'll offer no assurances.  It's worked quite well for us the past few years and perhaps it'll be of some use to our readers.

Our immediate outlook is bearish. [...] If you're short and the market is dropping, expect support circa 15300 and 15150.  On a big plunge there'd be support around 14900.  In other words, these would the levels at which to consider covering shorts."

As we now know, the DJIA's high was just a few days prior to that statement and it subsequently plunged to tally its worst month since May 2012.  The 15300 and 15150 levels did provide minor support on the market's trip down to 14810 to close the month.

A note for those who have asked, we still hold AMAVF with our stop currently set at $98.


In our second installment, we showed the following chart and warned of a possible bounce while stating: "The DJIA uptrend since November remains intact, but it should not hold for long.  We'll remain bearish in the coming week."

 

Of course the market went lower as we'd expected, and here's an ominous update of that chart:

As predicted, before the market continued lower there was a small bounce and when we posted our third installment the DJIA was at 14962 when we wrote:  "There 'should' be a bigger bounce, but if not then the market could easily drop another 200-400 points before catching a solid bid."

The bigger bounce still eludes us, as the DJIA only went about 100 points higher before dropping to the month's lows today of 14762 which is exactly 200 points lower from last week's update.

We also posted a mid-week update Tuesday morning, stating: "Support on Tuesday should be found between 14800-14900 in the DJIA, or within the broad range between 14550-14750 in the event of a more material drop." 

The DJIA spent the rest of the week essentially between 14800-14900:

Markets are closed Monday per the Labor Day holiday in North America, and we remain longer-term bearish while still expecting a near-term bounce.  That bounce 'should' begin Tuesday, but the market could certainly drop lower first.  We'd expect that drop not to be more than another 200 points or so, should it occur.  An obvious wildcard is possible U.S. armed attacks in Syria.

We would not turn longer-term bullish unless the DJIA is closing above the red trend line shown in the 1-year chart above.  We expect September to be another down month.

As such, while we are up roughly 8% on our most recent market shorts from late July, we've kept those and previous market short positions open but might cover the latest entries if the market plunges further on Tuesday.


Worth noting is that we also closed the majority of our gold and silver speculations on Tuesday, which proved to be at the exact highs (so far?).  We booked massive gains and retain some long positions effectively free of cost. 

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