A Market Timing Report based on the 4-11-2014 Close, published Sunday April 13, 2014

The SP500 Index (SPX, SPY) fell following a failed breakout to new 2014 highs.  Markets often test higher levels in that manner, though they don’t always fall of course!  When not enough buyers are there to take a stock or index to higher and higher highs, the market falls back through prior resistance and heads lower.

We are now at one of the support levels pointed out last Sunday with the major channel line (yellow) just below.  If that does not hold, it would suggest a worsening of the market’s character, and we may see a much more sizable correction.  Be prepared to protect your profits at some point.  For example, we’ve already sold 75% of our U.S. small cap exposure.   Of course, follow your own plan, but riding this market down 25-30%, if that happens, is something that you may not want to do.

Immediate support is at SPX 1813.55 (11-29 high), 1804 and 1768.  Since we are at support right here, selling right at the Friday close would not make much sense.

As mentioned in prior posts, I generally recommend selling in steps unless there is a major event to deal with such as the Japanese tsunami.  Then it’s advisable to get out immediately as the market often freezes up for a day or at least the following morning as if to pay its respects.

Do NOT sell if you are not willing to re-enter the market however.  That is how many lost huge amounts of money during the 2008-2009 decline.  They sold at the bottom and never changed their mind about stocks.  Not a good strategy.

Most of the data hinted that sentiment was setting us up for less of a pullback than we’ve seen, at least on an immediate basis, but there was one instance that showed a similar sentiment pattern where that was not the case.  You can read that and about what our allocation is to each major index that we follow here as well as where we’ll peel off some more exposure:  Free Subscription to My Newsletter and access to my latest comments/strategy  I’ll send you back the password to the access page and the weekly newsletter in the same email.

Here’s the SP500 Index Chart (click to enlarge):

SP500 Index is nearly at critical support.

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