March 26, 2018
Turns out Friday was a tough day for the markets, too. We saw all of the remaining 2% downside that we projected before open (in our last blog) and the equity indexes closed on the lows of the day, signaling more trouble ahead.
For the week, the S&P 500 was down 5.95%, bringing the month-to-date performance to -4.63% and the year-to-date number to -3.19%.
As of this morning, the 200-day averages are holding as support, as we expected. Futures markets are positive, as of this writing.
We are still expecting to spend some time with prices consolidating at these levels before having a lot of confidence in any move higher. This probably also means an elevated level of volatility for a bit.
Of course, it is always possible that the markets will turn around and go straight higher from here and volatility will sink, but we think this is not the most likely scenario given the news flow around tariffs and trade wars. The technical indicators that we follow still point to the downside and until we get some positive signals there we will remain cautious of any rally.
Any closes below the 200-day averages will be bearish signals and would lead us to consider more aggressively raising cash across the board.
We are open to the idea that strength today may be a good opportunity to get some capital out of the market while we wait to see what happens with trade wars and price action, but our model is to follow our pre-determined exit rules and adjust those only if they start failing to protect us.
Shane Fleury, CIO
Elevate Capital Advisors
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