Stock Market Danger | 200 SMA Near
Momentum Rider forecasted on Sunday night that a test of 1,330 this week was a real possibility due to Spain and European debt fears escalating. Today’s low for the day hit that target near 1,329 before the market bounced late in the day. The news that bounced the market was a Fed release saying that they are ready to make a QE move if necessary. That was hardly news as Bernanke said that in his testimony last week but it was enough to cause some short covering.
The only interpretation from the release that could be viewed as bullish right now is that Bernanke would announce QE in early August instead of waiting until September like most believe he will.
After the bell, Apple reported earnings and missed their numbers which could put the market under even more selling pressure and the important 50 SMA will likely be broken. The next stop is the critical 200 SMA near 1,315. With the strongest stock in the market missing and based on its large percentage position in most institutional portfolios, and its large weighting in the index, it could really hit the market.
MR has been selling many positions across the board in their portfolios over the last 3 trading days in case the 200 SMA is breached. A repeat of the first few weeks in August from 2011 would be disastrous for any portfolio and the risk is simply too high in our opinion.
Our belief is that the next 6 weeks into early September carries a lot more downside risk than missing out on upside profit. Unless Bernanke does surprise the market in early August, we expect more selling pressure and at best very little upside from here. Be nimble in case the market unravels quickly with automated computer selling below 1,300.
At a minimum, consider hedging your portfolio with put options, buy some inverse ETFs, and sell your riskiest and highest beta positions just in case. Don’t sell everything but lighten up if you can to see what happens in the next few weeks. Cash is sometimes a good position and this is one of those times.
Investor Notes:
MR recommends investors continue to remain cautious and lighter on riskier equities until after the longer term financial situation in Europe has more clarity. The short term has turned negative, and the 200 SMA is getting close so be ready to make some more sells if necessary.
Gold and silver have not shown the strength MR anticipated in June and July. At this point silver needs to hold its final support at $27/oz or it could see a big drop. Gold’s key support area is $1,550/oz before creating increased selling. Precious metal investors need to be on watch to avoid a big fall and to free up cash to buy a big selloff if one comes. Both gold and silver are still great long term investments, but pain may be coming if buying doesn’t come very soon.
The caution alert for retirement accounts and investors is still present and will remain for the foreseeable future.
______________________________________________________________________________________________
Advertisement:
Brand New Elite Wealth Group Membership Offer
Investors and traders can now take advantage of all of Momentum Rider’s trader and investor services and products by joining our brand NEW Keys to Wealth Group Elite Membership.
You will get access to the Momentum Rider Stock Trading System that finished in the top 1% of over 700,000 traders in two separate CNBC Million Dollar Trading Challenge Contests in 2011.
Click here to see a sample of what you will have unlimited access to: Keys To Wealth Group Products and Subscriptions (click here).
The group’s initial focus will be on stock market investing and trading wealth creation but it will be expanded over time to include many more categories and strategies on wealth creation and protection. This is an LIMITED TIME opportunity to be included as a CHARTER MEMBER in this elite group for a very low membership price (NOW JUST $49 per month).
You will be getting access to the top Momentum Rider investor portfolios, Special Reports, stock picks, education, and much more by trying it out risk free for 30 days.
_______________________________________________________________________
Good luck in your trading and investing,
This newsletter is brought to you by the publishers at Jalexa Trading Consultants, L.L.C. Nothing in this post should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed to address your particular investment situation. No communication by our employees to you should be deemed as personalized investment advice. Any investments recommended in this blog post or through any of its advertisements should be made only after consulting with your investment professionals and only after reviewing the financial statements of the company or investment.
© 2012 Jalexa Trading Consultants, LLC. All Rights Reserved. Protected by copyright laws of the United States and international treaties. This newsletter may only be used pursuant to the subscription agreement and any reproduction, copying, or redistribution (electronic or otherwise, including on the internet), in whole or in part, is strictly prohibited without the express written permission of Jalexa Trading Consultants, LLC.
