On October 17, we alerted Blue Chip Daily subscribers to expect a technical rally in the S&P 500 (SPX), with a 3900 target level.
(SPX) closed that day at 3677.95.
It reached the 3900 target level, 9 trading days later, on 10/28/22, at 3905.42.
7 MINUTE VIDEO, HERE: https://youtu.be/oF9Ubz_sQOQ
We went into Wednesday’s Fed meeting at 90% cash and alerted not to expect a Fed pivot yet.
Current cash allocation target is 70-80%, based on how charts develop.
OUR CURRENT TECHNICAL VIEW:
1. The recent recovery attempt in (SPX) stays intact as long as the index doesn’t close below 3650, but it is under pressure currently.
2. (SPX) is trying to recover but is still in a longer-term downtrend. 3500 is the recent major low support level.
3. (SPX) is being weighed down by mega cap Nasdaq 100 technology and growth stocks, including Apple (AAPL), Amazon (AMZN), Google (GOOGL), Meta (META) and Microsoft (MSFT).
- Over 18% of the S&P 500 is comprised of 5 stocks.
- Over 25% of the S&P 500 index is in the technology sector.
4. On a relative basis:
- the Dow Jones Industrial Average (DIA) is positioned better than the S&P 500 (SPY)
- Nasdaq 100 (QQQ) is the weakest of the three majors
- there are much better opportunities outside of the index, in select high-quality large cap stocks.
5. Select large cap stocks or ETFs trading over their 50 & 200-day moving averages, in established uptrends, may offer a better, less volatile opportunity.
- Energy and healthcare are our top ranked sectors currently.
6. Our view remains:
- hold higher cash levels
- avoid trying to find the lows in tech downtrends currently
- expect volatility and use it to add to uptrends.
- look for opportunities on pullbacks in established uptrends