Tonight we are updating our look at the S&P 500 via our favorite chart of SPY. Since the close of September 28, the last day of the quarter, SPY is lower by -13.60%.
That is a pretty epic drop.
Since the close of October 10th, the weekly Displaced Moving Average (DMA) Channel has been below or in the DMA Channel which means that the bias is negative.
Second, the Erlanger Volume Swing (EVS) is at -33.46. Above 0 is good and below 0 is bad. So currently, it is way below zero trying to find a bottom.
Third, the Erlanger Crossover Spread (EC) Spread is at -52.96 from which is not its lowest level since the quarter began.
Last, the Erlanger Trend Direction (ETD) is in downtrend as it is now red in the lower 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. For now, cash is at 50%.
We recommend that you begin to build a shopping list of new ideas to buy in addition to nibbling on really weak days.