We are updating our look at the S&P 500 via our favorite chart of SPY. There is some improvement again this week.
Since the close of October 10th, the Weekly Displaced Moving Average (DMA) Channel (Orange Band) had been below or in the DMA Channel which means that the bias had been negative. Two weeks ago it moved above the channel. The Daily (Yellow Band) is also above the channel.
Second, the Erlanger Volume Swing (EVS) is at 27.08 from 21.63. Above 0 is good and below 0 is bad. The current action is showing some recycling of the recent strength.
Third, the Erlanger Crossover Spread (EC) Spread is at 77.67 from 84.20 which is still positive but off the recent high.
Last, the Erlanger Trend Direction (ETD) remains in uptrend as it is now green in the upper half.
So what is an investor to do here? We would recommend to stay with strong stocks and begin to nibble on weaker stocks in rally mode on the ETD.
Several indicators remain weak which is why we adjusted how we add to positions in our Morning Matters Portfolio found at Superstock Investor. For now, cash is at 33% from 42% and we are nibbling on new buys as we just added a new buy last week.
We recommend that you begin to build a shopping list of new ideas to buy in addition to nibbling on really weak days which currently are few and far between.