CHARTIST HOTLINE
Monday, October 05, 2015
Special Chartist Hotline, Monday, October 5th, 3:00 p.m., West Coast Time.
With rate hike fears all but eliminated for the time being, the market continues to rally. Friday’s price action was most impressive. The Dow was down 258 in the early going but finished the session up 200, that’s a swing of 458 points. It then proceeded to tack on another 304 points today, with advancing stocks overwhelming declining stocks by a ratio of 7:1. The last time advancing stocks led by 7:1 was back on December 17th of last year.
“Can this rally be sustained?” is the obvious question. The Benchmark S&P 500 has finished ahead for five consecutive sessions, gaining 5.6% in the process. It is important to remember that bear market rallies are most deceptive and often look like the real thing. In the last bear market, the S&P 500 enjoyed several rallies well in excess of its most recent gains.
The bottom line is that our models are bearish which means that the odds continue to favor the downside. Our advice is to stay in a cautious 15% equity position.
Our next regular hotline is scheduled for tomorrow, Tuesday, October 6th, 3:00 p.m., West Coast Time.
