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
RUSSELL 3000 50DMA<200DMA
CLICK ON LINKS BELOW FOR TECHNICAL INDICATOR EXPLANATIONS:
ASCENDING – DESCENDING TRIANGLE
DIRECTIONAL MOVEMENT INDEX (DMI)
MACD-MOVING AVERAGE CONVERGENCE-DIVERGENCE
RELATIVE STRENGTH & PEER STOCK PERFORMANCE
SUPPORT, RESISTANCE, BREAKOUT, BREAKDOWN
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)
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Jeff Marcus founded Turning Point Analytics (TPA) in 2009 after 25 years on trading desks and 13 years as a head trader to provide strategic and technical research to institutional clients. Turning Point Analytics (TPA) provides a unique strategy that works as an overlay to clients’ good fundamental analysis. After 10 years of serving only large institutions, TPA now offers its research services to mid and small managers, RIA’s, and wealthy sophisticated individuals looking for a way to increase their returns and outperform their peers.
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