Trading was quiet yesterday due to the one-day public holiday in London and S&P prices hovered near the highs of the recent rally. We have been concerned that prices might not make any further headway as mentioned in the last sentence of the August 28th edition so have been nervous about outstanding recommended long positions in various stock markets. The two days of sideways movement led to an intra-day (two-hourly) compression signal which then broke downward about one hour before the market close, so our model portfolio is out of the various long equity market positions:
We don’t usually report these intra-day signals because of the difficulty of doing so in a prompt manner but the scale of intra-day movement in these violent days makes it more important to do so.
It is too early to say if the S&P will yet bounce even higher toward the 2030 level so we will remain on the sidelines for a little while. It is possible that the market will sit in a large range between about 2000 or so and the recent lows, or that the decline may simply resume. We expect that further declines will eventually occur but cannot yet tell if that is imminent – our preferred medium-term position remains ‘short’ but we have not yet found a place to adopt it.
We will report further as events unfold.
