Oliver Warns: The S&P Is Finally Heading Down!

On Thursday of this week, Michael Oliver put out a Trading Alert. It’s not all that common for Michael to put out alerts unless he is pretty sure a major turn is underway. In this case he was warning that it is finally time to get out of the S&P 500, which ended the week at 2425.55.  Here is what Michael told his subscribers on Thursday.

The S&P500 has dropped intraday ten points below our specified long-term trend alert number for this week: a 2446 weekly close. Today it traded to 2434. There are times and places to wait for a weekly or monthly close for greater confidence of a trend change signal, but in this case the depth below our trigger number coupled with other technical factors we’re looking at suggest that waiting until tomorrow’s close (at or below 2446) could involve missing more downside. 

Therefore, we suggest that breakage is occurring now and that if you intend to exit stock long positions or begin bearish positions, today’s action justifies that. And this is the first time since the mid-February 2016 upturn that MSA has defined long-term momentum trend breakage. Prior selloffs over the past year and a half only involved short or intermediate term momentum trend factors. 

We’ve also specified a long-term trigger number based on quarterly momentum, and that number does not change all during this quarter: simply trade to 2405.30 (4% over the current 3-quarter moving average). For that momentum chart, such a trade constitutes a triple-bottom breakout below a momentum floor structure that is over a year wide. If that number is traded then consider that more evidence of negative trend shift. 

It’s likely that U.S. stocks will now earn an asterisk in this weekend’s Trade Sheet, meaning they should be considered a core position (negative), at least from our viewpoint. Also, as noted in last week’s Trade Sheet, this breakage by the S&P500 warrants utilizing it (or its inverse ETF, SH) as a short-side of a spread against our previously recommended long position in MOO (ag-industry ETF).

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