August 11th, 2025: Protecting Gains How Capital Preservation Rules Keep You Ahead

AT THE BEGINNING OF THIS WEEK:

The market opened mostly flat this morning, following a fairly decent bounce from the sell-off of a couple of weeks ago.

If you're wondering, we remain on the sidelines in safe, decently yielding money markets and will remain so at least until this coming Friday when we get this week's market data point.

As a reminder, this week's market has not occurred yet. If will not 'have' occurred until the end of the week. 100% of our trade decision-making process is predicated on where the market "IS" and "How IT Got There". At this point in time, all we know (all anyone knows, actually) is where the market ended last Friday and how it got there.

Here is what that means:

1. The market is currently in a bull-biased overall trend according to our analysis, which does not mean anything other than the market has not changed its current bullish bias since April 13, of 2022.

2. The end of this bullish bias of the market could begin at any time... today... tomorrow... this week... this month... next month... this year... next year... 10 years from now. No one knows when the next sell-off is going to occur; nor how long it will last. This is exactly why we do not speculate on what the market is going to do and if you are listening to anyone tell you that they know anything about the future of the market, my advice is to stop listening to that person or entity. They are wasting your time and they absolutely do not know what this market is going to do in the future. No one does!

A week ago, this past Friday, we took all clients out the market and into higher-yielding money markets. Did we do this because we knew something bad was about to happen? No. Did we do this because we were forecasting a new bearish trend is about to begin? No. Did we do this because we were afraid of what the government was going to do next? No. Did we go to cash because the market was no longer in a bull-trending bias? No.

We went to cash because the market pulled back (sold off) enough to trigger our "Capital Preservation Rule". Our Capital Preservation Rule is totally independent of market conditions, moving averages, bull or bear biases, etc. This Rule is simple... it says if the market moves down enough in the current trade to reduce the "unrealized gain" by 10% or more (as of the end of the week, of course), we will exit the trade. Our goal is turn as much unrealized profit into realized gains once a trade gets above a minimum level of gain.

Now we wait until we get the signal to reenter the market. Several triggers have to occur before we can move back in, including (but not limited to): The overall Market Bias, Position of the TMI, How the MACD Histogram is stepping, Current Trend of the TMI.

Most of these triggers are in alignment to give us the ok to move back into the market with a bullish trade, but not all of them. Right now, we sit tight until this coming Friday to see what the market "has done" for this week.

THE NOISE:

Alex Goodwin, Vice President

The indexes recovered all of their losses and more last week as Apple and other large cap tech companies led the charge. Stocks shook off the tariff drama and disappointing jobs report alike, and investors gained confidence that a September Fed Funds rate cut would be a likely outcome.

Apple surged more than 13%, its best week since 2020, after announcing a massive U.S. manufacturing investment expected to help sidestep new semiconductor tariffs. Strength from names like Gilead Sciences, Expedia, and Monster Beverage added fuel to the rally, while energy lagged on falling oil prices and healthcare was dragged lower by a steep post-earnings selloff in Eli Lilly. Nine of eleven sectors finished higher for the week.

Since the August 1st tariff installment, we have seen a number of U.S. and foreign firms pulling out all the stops to gain favor with the administration knowing that President Trump is wielding tariffs as both a hammer and a bargaining chip. Apple’s $100 billion pledge to increase domestic manufacturing provided them with an exemption on the 100% import tariff on semiconductors. Major chipmakers like TSMC, Nvidia, and Samsung are already in the process of expanding U.S.-based facilities and similarly found themselves shielded from the 100% import levy. This marks a major pivot toward American manufacturing, as tariff incentives and political pressure drive companies to accelerate the relocation of critical production across multiple industries.

The coming week will be a momentum test for the market. The July Consumer Price Index report is set to be released Tuesday morning and will be the most closely watched data point. On the geopolitical front, traders will be watching for ceasefire developments between Russia and Ukraine and the tariff jockeying that has been key factor in the United States’ involvement. So while the indexes will try to extend their push back into all time high territory, we will continue to watch the data.