Navigator Algorithms – 100% Cash
The stock market sold off all morning and may be ready for a bounce at this writing. Regardless, the market has done quite a bit of damage absent a complete recovery this afternoon. The S&P 500 has been off nearly 100 points, the Nasdaq 100 nearly 300 points, and the Dow approaching 1000 points. The sell-off is being attributed to a rise in global China Virus cases. Yet we pointed to the change in market behavior we began to observe as much as a week ago.
Disappointment over the lack of stimulus and pre-election jitters may be more than enough to scare off buyers today – as opposed to the fluctuating level of China Virus cases. Also, today seems more of a “lack of buyers” decline as opposed to heavily motivated sellers. And perhaps a more complex correction pattern is underway, such as a large triangle, which pins the correction start all the way back to the September peak.
If we are starting into more of an extended decline, it is likely to bottom in a week or two. I don’t see the market tipping its hand either way as yet. Today’s action, if we close in the bottom of the candle range, would be decidedly negative.
It is best to be patient, and look for the Algos to bring us back in at the right time. The Navigator algorithms took us to cash at 3405 on October 12th. There is no sign of a buy signal yet and the index has been as low as 3356 today. Even the bounce underway could easily be a shorting opportunity, though the put/call ratio is rising to indicate that some healthy fear may finally be entering the markets here.
Stay tuned and be patient. Remember that you are a sniper – waiting for the kill shot. Put your pistol away.