03-13-2020: End of Worst Market Week in Decades

The S&P 500 lost about 12.5% this week. Year-to-date, the S&P 500 is down -16.09%.

You already know the news on the growing pandemic. You know the President declared a "State of Emergency". You also know that no one knows how long this will last or how bad it will get. And you know that some of our duly elected politicians are trying to capitalize on a national emergency to the detriment of the President and his team working to control the spread of the virus.


You probably know that the Federal Reserve, a non-governmental organization that can, in effect print as much money as they want, are dumping trillions of dollars into various components of the economy with the hope of forestalling an almost inevitable global recession.


And... you also know this market has seen near record swings, almost daily.


But... the overall trend of this market is from the upper left to the lower right... it is definitely in a bearish trend. And, we all know that the current trend in the market will last exactly until... it doesn't.


Starting in about an hour from this post, my quantitative computer software programs will begin the arduous task of processing this week's data. Millions of computations will be occurring over the next 24 hours as the data are crunched. I will start seeing the first of the output reports about 3:30 pm tomorrow (Saturday). Will we get our first "TIP Warning"... probably. As you know, a TIP is when the 200-day moving average of the Total Market Index (TMI) moves from a bullish slope to a bearish slope. It takes 3 consecutive end-of-week TIP Warnings where the weekending close of the 200 dma is lower than the prior Friday close of the 200 dma, to trigger a "TIP Alert". When we get the TIP Alert, our investment bias becomes solidly bearish and we begin the process of getting 100% into a bearish investment strategy.


I will also be curious to see if the weekending price of the TMI is more than 4 standard deviations below the 200 dma. If it is, that would signal that the market could be oversold, which adds risk to being fully short the market.


At the close today, the market looks to have lost more than -13% for the week. The S&P 500 is now down -19.48% for the year.


The good news is, we were mostly in cash this week and our inverse ETFs did not stop out during the closing rally today. I continue to be bearish because the data continue to be bearish.

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