Strategy Update (2024-03-15)

Following a significant character change this week in the general market, Alpha Signals strategy triggers a sell signal on March 15th.

This week the stock market reacted quite negatively and pulled-back as the CPI and PPI data exceeded expectations and re-ignited inflation worries. Investors were spooked by the back-to-back inflation reports and doubts grew about the economic outlook.

The broad market has undergone a significant character change this week, transitioning from a period of a clear uptrend to a more choppy environment.

The Nasdaq Composite, a major market index, experienced a decline and retested its 20-day simple moving average (20sma). This marked the fourth time the index has tested this level in the past week or so. Repeatedly testing support levels is often interpreted as a bearish sign.

Many stocks have also been under pressure with major market indexes masking underlying weakness.

Therefore it comes as no surprise that the Alpha Signals strategy switched to a Red (Sell) signal today.

Chart of TQQQ ETF showing a sell signal as of March 15th.
Chart of TQQQ ETF showing a sell signal as of March 15th.

It is crucial at this point to preserve capital, refrain from attempting to predict market movements, and instead, focus on reacting to the prevailing conditions and prevent incurring substantial losses during the possible further downside in the near term.

All in all we have taken advantage of a good upswing of around 48% since the Buy signal (switch to Green) on November 7th 2023.