The bull market dodged a bullet on Friday.
With just 15 minutes to go before the close of trading, the S&P 500 was at 2880. It was down 98 points on the day and down 457 points for the week. And, it was looking to close the month of February below its 20-month exponential moving average (EMA) line.
That would have been a big deal.
Longtime readers know I use the 20-month EMA as the defining line between bull and bear markets. If the S&P 500 is trading above the line at the end of any given month, then the stock market is bullish. But, if it ends the month below the line, then the bear is in charge.
Some last-minute buying on Friday afternoon saved the bull.
Somehow, someway, buyers rode to the rescue and rallied the S&P 500 by 74 points in the last 15 minutes of the trading day on Friday. That’s a remarkable move – 74 points! It’s even more remarkable considering it happened at the end of a brutal week, where buyers had stayed away for the previous four days.
Here’s the long-term chart of the S&P 500 plotted along with its 20-month EMA…
You can see how the decisive breaks of the 20-month EMA led to the nasty bear markets that started in late 2000 and
early 2008. You can also see how the S&P finished February just above its 20-month EMA.
So, the bull is still alive… at least for now. That’s thanks to the sudden buying that hit the market in the final minutes of Friday afternoon.
Technical conditions are so remarkably oversold right now that we’re soon likely to get a sharp and sudden rally that lasts for several days. That’ll put some distance between the S&P and its 20-month EMA… and most investors will breathe a sigh of relief.
But, keep an eye on this chart towards the end of the month. A decisive close below the line will tell us this old bull market has finally ended.
Best regards and good trading,
Delta Report members John and Ryan share a few sincere words with Jeff…
I have read often that one of the most elusive, yet critical elements of successful investing is restraint.
But the self-control you exhibit throughout a trading day, as well as with longer terms (days and weeks), rings clearer than all those pieces of advice taken together. E.g., “You got to know when to hold and when to fold.”
Delta Report has made my market choices more and more successful over the years. An enormous “Thank you!”
Thanks for your timely guidance and updates in Delta Report! I follow very closely and read every update, and they’ve helped my trading tremendously in being able to take advantage of short-term opportunities like we are experiencing right now!
Jeff Clark Trader subscriber Darryle sends his appreciation to Jeff…
I really appreciate being part of your lowest-cost, Jeff Clark Trader service, and love the option trading videos! Most of all, I enjoy reading your detailed analysis and observations on various markets of interest, both in your trade alerts and in the Market Minute newsletter.
I am trying your trades, and while not doing very well in them so far, your unique teaching style has given me a much
greater appreciation for the complexities of the decision-making processes involved in options trading.
I want to thank you especially for taking time to answer reader Ryan’s question in last Wednesday’s Market Minute about whether or not to sell or hold a single contract when a 100% profit has been reached. It really answered a question that had been on my mind, even though our trades have not yet seen such profit.
Now at least I know that “a bird in the hand is truly better than two in the bush” in presumed scenarios with a single contract where the market is moving rapidly in the direction of our trade, and reaches the 100% profit threshold. Thank you for taking time to answer your readers!
Jeff Clark Trader member William and Breakout Alert member Paul tell us about their recent gains…
JUST SOLD EVERYTHING in my options account!
My account had a 250% gain within two-to-three months. Change the name of your letter to “The PAC-MAN STOCK-LETTER!” Haha!
Out of your latest put today for a 385% gain… thank you Mr. Clark.
And finally, Breakout Alert & Delta Report subscriber Jerry shares a gain, and his gratitude…
Since I am a subscriber to both the Breakout Alert and Delta Report, I receive the best of both worlds – option plays in the Delta Report (more powerful), as well as buying stocks straight-up in the Breakout Alert (safer investment without the risk/worry of “time decay”) based on Jeff’s recommendations.
Per his latest stock recommendation, I purchased a few shares, but I also did a “speculative play” option at the same time. Boy, am I happy that I did. With the coronavirus headlining the news, I just cashed out this morning for over a 130% gain – enough to pay for my subscription for the year.
Gee, thanks a ton, Jeff. I have learned so much from you over the months and do enjoy your analytical X’s & O’s when it comes to your graphs. Keep up the great work. One satisfied customer.
Thank you, as always, for your thoughtful comments and feedback. We look forward to reading them every day. Keep them coming at [email protected].