12/26/2018 Early Stock Bear Market appears to be in First Significant Rally

It looks like our warnings were with merit.

Stocks have fallen precipitously.  Hopefully many of you heeded our warnings and reduced stock positions, added to your money market position and potentially even hedged your positions with the Inverse Stock funds.  Had Monday not been a half trading day, we would have likely issued a notice to slightly reduce hedges and money market positions in anticipation of a bounce that materialized today in spades.

Today appears to be a key reversal setting up a rally that should last from a few days to a couple of weeks. However, this is not assured.

We are sorry to say we can’t give you an all clear.  Even though from a relative strength perspective, stocks got deeply oversold, from a trader positioning and other measures of sentiment, we can’t tell you that all the risk has been wrung out of this market by any means.

Though the decline has been substantial in terms of the retracement of the rally of the last 3 years, if this bear market retraces the entire advance from the March 2009 bottom, more pain could be in store.

Our advice is to consider staying diversified, holding some material cash (like about 1/3d), rely on your appropriate managed portfolio or your appropriate target date allocation fund for the majority of your holdings, follow our Market Observation Notices and reduce your stock position (adding to cash) if, as and to the extent the rally that began today continues.  

We will do our best to give to notify you if, as, when and to the extent this rally, should it continue as we hope, reaches certain note worthy retracement levels and when it hits the underside of the moving averages it left behind on or about December 7th.

Let us know if we can help.  We’ll be in touch!  God bless and Merry Christmas!