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Market Direction Model - Model switches to BUY on December 21, 2018

MDM has switched to a BUY signal. The CBOE Options Total Put/Call Ratio spiked to a near all-time high of 1.82 on Thursday. This may be a short-lived signal, as risk will be kept tight on this particular signal. The recent put/call spike to 1.37 did nothing to stem the selling. Further, out to year end, the performance of the general market after midterm elections usually goes higher. Going back to 1990 year end, the major indices finished flat to higher in every case except for 1994. This time, however, is playing out to be worse than 1994.

All of this suggests the selling is more pronounced than we have seen since 2011. Back in late 2011, the steep selling was due to ending quantitative easing, when the NASDAQ Composite lost -20.3% peak-to-trough. The Federal Reserve therefore had to reinstate QE to stem the bleeding. Will history repeat? Or rhyme? A softer Fed implies a reversal of Powell's recent statement of 2 instead of 3 rate hikes. While 2 is less than 3, it was still considered heavy-handed hawishness.

Suggested ETFs (Note: Many members buy the standard ETFs or their preferred ETFs. This list serves as a guide as to which ETFs we think may outperform, but the key point is to be on the right side of the market regardless of which ETF or ETFs one chooses.)

1-times

SPY (S&P 500) 

2-times

SSO (S&P 500)

3-times

UPRO (S&P 500)

NOTE: This is a suggested list. Investors may wish to become acquainted with the full range of available ETFs, and should make an effort to understand how these ETFs are created and what their components are, as well as being aware of the downside risks involved, especially with leveraged ETFs. Certain ETFs may be more appropriate depending on one's risk tolerance levels. Typing in keyword 'ETF' into the FAQ keyword search bar or going here https://www.virtueofselfishinvesting.com/faqs/search?p=1&q=etf  and visiting this site https://etfdb.com/  can be instructive.

This information is provided by MoKa Investors, LLC DBA Virtue of Selfish Investing (VoSI) is issued solely for informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. Information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of available data. VoSI reports are intended to alert VoSI members to technical developments in certain securities that may or may not be actionable, only, and are not intended as recommendations. Past performance is not a guarantee, nor is it necessarily indicative, of future results. Opinions expressed herein are statements of our judgment as of the publication date and are subject to change without notice. Entities including but not limited to VoSI, its members, officers, directors, employees, customers, agents, and affiliates may have a position, long or short, in the securities referred to herein, and/or other related securities, and may increase or decrease such position or take a contra position. Additional information is available upon written request. This publication is for clients of Virtue of Selfish Investing. Reproduction without written permission is strictly prohibited and will be prosecuted to the full extent of the law. ©2019 MoKa Investors, LLC DBA Virtue of Selfish Investing. All rights reserved.
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