Wednesday October 15, 2014

$SPX   Mid way into the week finds the Alpha One Model with five trades thus far.  We closed out $FFIV and $CP on opinion downgrades and traded both Call Options and Put Options as a hedging action on the portfolio.  There remain three open positions at this time, under the recommended allocation of 25% Long, but I am hesitant to commit cash until the model senses a bottom forming. And that is not yet happening.

The afternoon selling continued yesterday. But for the first time in four sessions, most of the major indexes held on to gains at the end.  By holding onto the gains, stocks are giving investors a chance to breathe a sigh of relief. However, the morning gain followed by afternoon selloff continued to suggest that the gains were driven by short sellers covering their positions. It will take a lot more rallies to get real buyers in and the major indexes out of their downtrend. The S&P 500 will need to reclaim its 200-day moving average which stands at 1906. Should that happen and the much-watched moving average holds, we are likely to see dip buyers making moves. We are at the beginning of the earnings season which does not look too bad for now.

We have received inquiries recently on our model for the $SPX and specific details as to the most recent call.  On September 22, 2014 the model on the $SPX turned negative at the Close 1994.29, see below for further detail.  The model had begun to turn Bearish on the 10^th of the month, but failed to hold the signal until the 22^nd.