Monday, February 29, 2016

Market update

Market update 02/28/2016

The market has been great for the last week. However, the market is still risky. We called it a tradable rally or the dead cat bounce. The U.S. market may be up for another 6%. At that time, you may want to be conservative (i.e. staying in cash or short-term bonds) even the Golden Cross (the charting without charts) tells you to return to equity. Today, the global markets such as Europe and Asia are still in very poor shape.

Today (2/29/2016), SPY’s SMA-200 is -3% and SMA-50 is 0%. Hence, according to the Golden Cross, we should still stay in cash.

The results of following table are as expected. During a market down trend or expecting a fierce correction, utility (ETF XLU) and consumer staple (XLP, those products you buy no matter what the economy is) are in up trend. The opposite end is consumer discretionary (XLY) and technology (XLK). The following returns have been annualized from 1/4/2016 to 02/28/2016. SPY represents the general market and is used for comparison.

Ann. Return



When there is a market plunge, most sectors including XLU and XLP would go down. When that happens, it may be a signal of a market bottom or close to it. It followed a similar pattern in 2007-2008 market plunge. However, the timing is different. First it is hard to identify the exact date for the start of the plunge; there were double tops (a technical pattern) that preceded the plunge.

Why we wanted to return in March, 2009 (the bottom)? The technical pattern told us a little later than March as it depended on the data (the rising stock price). The result is: From 3-2009 to 1-2015, the market gained 180%. Many abandoned the market totally ignoring the fact that the market ALWAYS returns.

This is my educated guess and the market is not always rational. I am not responsible for any loss.
For more of my reasoning and complete description, order the book described next. It has 800 pages (6*9) for $9.99. It could be the best $10 you ever spend.

The above is an abstract from my book "Complete the Art of Investing" which is available from Amazon.

I challenged to have the best-performed article in Seeking Alpha history, an investing site, for recommending 5 or more stocks in one year after the publish date. The concepts for that article are discussed in this book. 


  1. Tony - I read about your Golden Cross in the book when I purchased on, but now I am having issues with my Amazon account and I can't access the e-book. What is the Golden Cross signal for re-entering the market? Does SMA-50 have to drop below the SMA-200?

    1. " On a stock chart, the golden cross occurs when the 50-day MA rises sharply and crosses over the 200-day MA. This is seen as bullish." Both must be positive from my definition. You do not have to chart them as they are available by specifying SPY in There is a simple way to reset password. Thanks for the order and Complete the Art of Investing has over 800 pages (Kindle version). Best luck.

  2. Hi Mr. Pow! I'm still reading and can't thank you enough to read your humor jabs, making the book an enjoyment along with education!