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TPA Plus - Trend Range

S&P500, NASDAQ, AND RUSSELL 3000 DEATH CROSSES = TIME TO BUY (Mar 17, 2022, 9:38:04 AM)

Turning Point Analytics utilizes a time-tested, real-world strategy that optimizes the clients entry and exit points and adds alpha.   TPA defines each stock as Trend or Range to identify actionable inflection points.

In the short run, the market is a voting machine, but in the long run, it is a weighing machine.  – Benjamin Graham

WORLD SNAPSHOT COMMENTS & CHARTS     Thursday, March 17, 2022

General comments first and macro tables at the bottom.  Links for Explanations of Technical terms at the bottom of the report.

S&P500, NASDAQ, AND RUSSELL 3000 DEATH CROSSES = TIME TO BUY

The benchmark S&P500 exhibited its death cross, 50DMA below the 200DMA, on 3/14/22. With that landmark, the major indexes have all accomplished this ignoble feat. The Nasdaq Comp 50DMA<200DMA occurred on 2/18/22 and the Russell 3000 (representing 98% of all publicly traded equities) 50DMA>200DMA happened on 3/4/22. Technically, we want last price above 50DMA above 200DMA, since that connotes a long-term uptrend in prices. The death cross has meant to alert us to the idea that the long-term pattern has changed. Unfortunately, once the 50DMA crosses below the 200DMA, stocks have already put in their declines and markets have become oversold.

The table below examines the performance of these 3 major indexes 30, 91, 182, and 365 days after all 3 indexes have experienced a death cross within the same timeframe (40 days or less). The results look at the past 35 years (The Nasdaq Comp was created on 12/31/86). This has occurred 13 tims intne past 35 years.

The major findings are:

91 days (approximately 3 months) after all 3 indexes were trading 50DMA<200DMA, the average performance for the S&P500, Nasdaq Comp, and Russell 3000 was +8.34%, +12.77%, and +8.67%, respectively. 

182 days (approximately 6 months) after all 3 indexes were trading 50DMA<200DMA, the average performance for the S&P500, Nasdaq Comp, and Russell 3000 was +10.99%, +15.39%, and +11.77%, respectively.

365 days (1 year) after all 3 indexes were trading 50DMA<200DMA, the average performance for the S&P500, Nasdaq Comp, and Russell 3000 was +20.21%, +40.20%, and +21.59%, respectively.

Obviously, after all 3 indexes experienced a death cross, the best thing to do on a historical basis has been to buy not sell. The Nasdaq has the best overall performance by a good margin. In the current situation, the Nasdaq has also been the most punished. Of course, there was never a World War or a Nuclear War during any of the previous measurement periods, so if your prognostication is that the current situation unravels into a wider war in Europe, it may be better to remain uninvested. That caveat aside, this seems like a buying opportunity.

Table and charts below.

PERFORMANCE WHEN ALL 3 INDEXES EXPERIENCE A DEATH CROSS

S&P500 50DMA<200DMA

Chart, line chart

Description automatically generated

NASDAQ 50DMA<200DMA

Chart, line chart

Description automatically generated

RUSSELL 3000 50DMA<200DMA

Chart, line chart

Description automatically generated

CLICK ON LINKS BELOW FOR TECHNICAL INDICATOR EXPLANATIONS:

ASCENDING – DESCENDING TRIANGLE

BASING-TOPPING-CONSOLIDATION

BREAKOUT (Breakdown)

CHANNEL & RANGE

DIRECTIONAL MOVEMENT INDEX (DMI)

DOUBLE BOTTOM or DOUBLE TOP

MACD-MOVING AVERAGE CONVERGENCE-DIVERGENCE

MOVING AVERAGES

RELATIVE STRENGTH & PEER STOCK PERFORMANCE

REPEATING PATTERNS

RSI-RELATIVE_STRENGTH

SUPPORT, RESISTANCE, BREAKOUT, BREAKDOWN

TREND

ALWAYS REMEMBER: No strategy exists in a vacuum always evaluate the relevant sector & market.

Over 80% of portfolio performance is determined by sector and market forces (Ibbotson & Kaplan study January/Febuary2000)

Turning Point Analytics Disclaimer

Turning Point Analytics (TPA) is only one of many tools that an investor should use to make a final investment decision.  TPA is an overlay on top of a clients good fundamental or macro analysis.  TPA does not create or provide fundamental analysis. The information in this communication may include technical analysis.  Technical analysis is a discipline that studies the past trading history of a security while trying to forecast future price action.  Technical analysis does not consider the underlying fundamentals of the security in question and it does not provide information reasonably sufficient upon which to base an investment decision.  Investors should not rely on technical analysis alone while making an investment decision.  Before making an investment decision, investors should consider reviewing all publicly available information regarding the security in question, including, but not limited to, the underlying fundamentals of the security and other information which is available in filings with the Securities and Exchange Commission.  The information and analysis contained in reports provided by TPA are copyrighted and may not be duplicated or redistributed for any reason without the express written consent of TPA. The information in this communication is for institutional or sophisticated investors only.  By accepting this communication, the recipient agrees not to forward, and/or copy the information to any other person, except as permitted, or required by law. TPA does not guarantee accuracy or completeness. TPA is a publisher of technical research and has no investment banking or advisory relationship with any company mentioned in any report.  Reports are neither a solicitation to buy nor an offer to sell securities. Past performance is in no way indicative of future results. Opinions expressed are subject to change without notice.  TPA will provide, upon request, the details of any past recommendations. TPAs analysis and recommendations should not be used as the sole reason to buy or sell any security. TPA may compensate brokers and intermediaries for sales and marketing services. You understand and acknowledge that there is a very high degree of risk involved in trading securities and/or currencies. The Company, the authors, the publisher, and all affiliates of Company assume no responsibility or liability for your trading and investment results.  It should not be assumed that the methods, techniques, or indicators presented will be profitable or that they will not result in losses. Statements, data, and analysis made by TPA or in its publications, are made as of the date stated and are subject to change without notice. TPA and/or its officers and employees may, from time to time acquire, hold, or sell a position in the securities mentioned herein. Upon request, TPA will furnish specific information in this regard. TPA will not be held liable for losses caused by conditions and/or events that are beyond TPAs control, including, but not limited to, war, strikes, natural disasters, new government restrictions, market fluctuations, and communications disruptions.

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