Eye on the Market with David O. England

Last week, we analyzed questions to ask before buying or selling, plus seasonality charts.

I do not give advice on when to buy, or sell -- that is your decision. As a seasoned investor/trader and educator, I teach my systems on how to read the market so you can make better educated financial decisions for you and your family.

Today, I will answer your questions, beginning with whether or not the Standard & Poor’s 500 is giving sell signals. As I type, the S&P 500 continues to make new highs, so many are asking if it is time to sell, and take the profits and run.

To answer, I use one of my systems, highly effective at giving profitable long-term buy and sell signals. Again, nothing is 100 percent accurate. Let’s take a look at a 20-year chart of the S&P 500 to see if my system would have worked to get and keep you in the green. 

My system sell signals hit when specific conditions occur. First, the price must cross down through the (blue) signal line and stay under this line by the end of the next month. By using this system, I indicated the times (red boxes) when you would have been out of the market. 

Many wished they would have been out of the market during Point A (46 percent drop) and Point B (55 percent drop). Remember, it takes a 100 percent return to recover from a 50 percent drop.

There were two times (purple boxes) where you would have had a month or two break from the market. After all, who doesn’t like a good vacation?

The next question: What are the buy signals? Do the opposite and wait for the price to close and stay above the (blue) signal line by the end of the next month. You can see by using this system you would have had several very profitable runs.  

So, here are action points to think about:

First, are there currently sell signals for the S&P 500 -- Point D? 

Second, do you have a signal line for your securities?

Third, if not, why?

I teach folks from Seattle to Florida these buy and sell systems -- you can learn as well. Since it has been more than eight years since the March 2009 bottom, I have stated many times -- if you’re close to retirement or retired, focus on the return of your money than the return on it -- managing risk is extremely important.

To learn more about this system and others, attend my upcoming Charting/Technical Analysis Seminar on Friday, Aug. 11, at John A. Logan College. Go to my website Davidoengland.com for details.

DAVID O. ENGLAND is the founder of the Eye on the Market-Training Academy (Davidoengland.com) and Associate Professor Emeritus of Finance. This column is for educational purposes only and not intended as financial advice. Your decision to buy, sell, short or hold any investment product is a direct result of your decisions, free will, and research. For questions including the Charting Seminar -send to thetraderseye@gmail.com.