Market Review:
Exactly 1 year ago, something notable happened with the S&P 500: the long-term trend flipped to up.
By using a 100 and 150 day moving average, I can partition any chart into either a bullish or bearish regime. And anytime a chart is in a bullish regime, I never consider betting against it.
Also, in a bullish regime, higher-highs should be paid attention to which, in hindsight, was especially true in mid-November of last year.
This simple filter can be combined with other investing techniques, such as fundamental analysis, although I don’t personally do this. But let’s say I was bearish on the S&P 500’s fundamentals, I would say, ‘okay, but right now the long-term trend is up, so I’m going to put this bearish thesis on the back-burner for now. If the long-term trend eventually turns down, I will reassess.’
Interesting ETFs:
If you’re a long-time reader of this newsletter, you probably have noticed that I believe in certain core principles such as:
Never bet against the S&P 500 (it’s a Trend-Following index)
Never fight long-term trends
Never buy options
Always trade small positions
Cut losing trades systematically