Each week in Superstock Investor we update our look at the S&P 500 via our favorite chart of SPY.
Since the close of October 10th, the Weekly Displaced Moving Average (DMA) Channel (Yellow Band) had been below or in the DMA Channel which meant that the bias had been negative.
Thirteen weeks ago it moved above the channel and this action is now toast as it moved back into the channel last week. Daily price (Yellow Band) is back in the channel. Bias is neutral.
Second, the Erlanger Volume Swing (EVS) is at -13.65 from -21.85. Above 0 is good and below 0 is bad. The current action is showing weakness.
Third, the Erlanger Crossover Spread (EC) Spread is at -74.40 from -74.06 which is flat from last week and remains negative.
Last, the Erlanger Trend Direction (ETD) remains red which moves from pullback to downtrend.
So what is an investor to do here? We would recommend to stay with strong stocks and begin to trim selectively to those names that have participated in excess of the market. For the time being we are sitting on our hands which is a change from a week ago.
Several indicators remain weak which is why we adjusted how we add to positions in our Morning Matters Portfolio. For now, cash is at 25% from 33% and we may take cash back to 50%.
We recommend that you begin to raise some cash here.