The Long Term LAMPP is on the verge of turning red, possibly as soon as next week. The LAMPP index has descended right to its 78 week moving average. Crossing below that moving average would turn the signal red.
The short term LAMPP remains on red for the 8th straight week, in what was at least a premature signal, but not necessarily a wrong signal. In my short term trades list in the Wall Street Examiner Pro Trader Market Update there are now more shorts than longs and the shorts turned more profitable than the longs in the last week. Those are signs of a market in intermediate transition.
And that at least partly validates the Short Term LAMPP red signal. The market averages have been rising on an ever narrowing list of participating stocks. The averages are masking spreading technical weakness in an increasing number of stocks. Air pockets have developed in many names as they report worse then expected earnings. You may have seen this in your own portfolio over the last two weeks. The market averages rarely tell the whole story, and sometimes, like now, they tell a misleading story.
In the next week or couple of weeks the LAMPP will cross below its 78 week moving average. That will be a red signal. It will be time to get out of stocks. Tops take months to roll over, so there’s probably no urgency to “sell everything,” but we should stay on a systematic program of regular sales to build a substantial cash holding by March of 2018. I’m looking at 60-70% of a portfolio in cash. Your goal would differ depending on your personal needs. As an older person, I might want to hold an even higher percentage of cash.
I also think that it’s probably ok to start shorting the market now by shorting the SPY, or buying inverse ETFs. I would not use leveraged ETFs or puts unless you are an experienced technical trader, or are comfortable with a third party timing service such as the Wall Street Examiner Pro Trader Market updates.