RED ALERT! Time To Go On Defense (In Stocks)!

Flashing Emergency LightsBears WrestlingI have been watching the stock market for several months looking for a “top” to form sometime late this year as the current bull market in equities is now over six years old.  For this entire year we’ve seen the market stuck in a sideways trading range between S&P 2040 and 2140.  This has been the longest such period in the last hundred years.  I’ve been watching for two diametrically opposed potential endings for this pattern while noting that there had not been a serious correction in recent times.  The bullish case is that this has been a “rolling correction” taking the market to the bottom of a longer term trend channel that, when the correction completed the market would resume higher going into Autumn, most likely when there would be more clarity on the direction of interest rates and in the Greek, et. al. debt situations.  Furthering this case has been the lack of bullish / mania sentiment that usually accompanies a major market top.  The bearish case is that the market, particularly breadth was tiring and that repeated failures to break out would eventually lead to a breakdown.  Furthering this case is the looming debt bubble, the fact that true long-term economic growth is nearly impossible under currently socialist policies worldwide without near-zero interest rates and central bank stimulus to prop up financial assets.

Elliott Wave theory has also been presenting both these patterns for several months now as I’ve been waiting for the market to select one of the conflicting patterns, something the market has been extremely reluctant to do all Summer.  As recently as a week ago, I was reasonably confident that the bullish pattern was going to temporarily prevail into the Autumn, but now the market has finally and clearly chosen the bearish course as of this Thursday, having broken critical support at 2040.  In fact, it not only broke support, it smashed it and followed through massively Friday to paste a nasty “19-handle” on our backsides Friday closing at NINETEEN-71!

D Fense
image courtesy (©) “Going Like Sixty
As a retiree fearing the possibility of this happening, I sold some non-taxable holdings to cash over the last month while staying mostly invested against what I felt was the more likely bullish scenario playing out.  Now, however, I am and am advising SELLING ALL non-taxable stock holdings to cash, with maybe some into bonds, along with at least half of one’s taxable holdings to avoid the potential of a deep correction to at least 1800, or worse, a new bear market.  Whatever I do not plan to sell Monday, I will be looking to sell on any short term bounces as I believe 2040 is now strong resistance!   While I base most of this on technical indicators (Elliott Wave, etc.), I also have some non-technical, non-scientific “gut instincts” that suggest that September could be a major turning point in the current global financial and political situation.  First, there is the IMF that seems to be preparing for a global move away from the Dollar as a reserve currency, possibly replacing it with it’s SDR currency and gold selling off to very attractive levels and nearing a major, major bottom.  There’s also the Shemitah.  While I don’t put a lot of stock in these types of indicators, it does seem to line up well with more technical data that I do follow.  In short, just about EVERYTHING is flashing RED!  One thing I am looking to continue to purchase a few more of is gold and silver coins, particularly circulated U.S. silver coins minted 1964 and earlier.  These are currently trading around 15-16X face value!   Below are some recent charts and articles from several people I have grown to respect for their usually timely investment information that has helped me avoid major losses in the past.

Chart on S&P 500 (INX) for Sunday August 16th 2015
Article and Chart on S&P 500 (INX) for Sunday August 16th 2015, by (©) Avi Gilbert, Elliott Wave Trader.net, via MarketWatch.com.
S&P 500 Daily Bars, by Simon Maierhofer, July 30, 2015
Recent Profit Radar Report S&P 500 Calls, July 30, 2015
Secret Sauce Chart, by Simon Maierhofer, August 13, 2015
Deep Tissue S&P 500 Analysis, August 13, 2015
Articles and charts by (© 2015) Simon Maierhofer, via iSPYETF.
Nested ABCD Structures Trying to Trigger Lower, by (©) L.A. Little
Stock-market technicals suggest a breakdance lower
Turns Bearish and Breaks Multiple Swing Point Lows, by (©) L.A. Little
Ugly stock-market action may result in attractive buy opportunity
Articles and charts by (© 2015) L.A. Little, via MarketWatch.com.
Market Alert: We Have Reached Our Sell Trigger“, Aug. 21, 2015, by (©) Ken Moraif, Moneymatters.net.  I’ve been following this guy for many years now.  His ability to avoid bear markets is uncanny. Market timer Tom McClellan sees stocks set up for ‘ugly decline’“, Aug. 17, 2015, by (©) Tomi Kilgore, via MarketWatch.com.  This guy called it two days before it began, to the (earliest) day!
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