Investors Weekly Update

May 23, 2020

Our equity/bond model - This long term reliable investing model provides investors with simple decision making in the markets:

  • When the model favors stocks, investors should overweigh in equities for maximum growth.
  • When the model favors bonds, investors should overweigh in bonds for safety.

Our benchmark SP500 remains on long term SELL signal as of end of April.

Oil sector remains on long term SELL signal as of end of April.

VIX – volatility index

VIX is now up and markets are down.

Daily fluctuation on the VIX and the markets can be extreme in current conditions, therefore, monitoring the monthly chart provides us with the big picture and not get caught up and distracted by the wild short term price action.

The major correction will not be over until VIX turns down on the monthly chart.

The major correction in 2000 was 50%.

In 2008 it was 60%.

If the current sell off is the start of another major correction, downside target is near the 200ema between 1600 & 1700.

Summary

Our benchmark SP500 is on a long term sell signal, a major correction is in progress.

The current investing model remains in favor of bonds, therefore, investors should continue to overweigh with long bonds or bond ETFs for safety over growth.

Disclosure

We do not offer predictions or forecasts for the markets. What you see here is our simple investing model which provides us with simple investing decision making. Entry points and stops are provided in real time to subscribers, therefore, this update may not reflect our current positions in the markets.

********

Jack Chan

Jack Chan is the editor of simply profits at www.simplyprofits.org, established in 2006. Chan bought his first mining stock, Hoko Exploration, in 1979, and has been active in the markets for the past 37 years. Technical analysis has helped him filter out the noise and focus on the when, and leave the why to the fundamental analysts. His proprietary trading models have enabled him to identify the NASDAQ top in 2000, the new gold bull market in 2001, the stock market top in 2007, and the US dollar bottom in 2011.

Silver has 47 protons and 61 neutrons