Founded in 1992, Jackson Wealth Management is an independent, fee-only investment advisor. Founder George P. Jackson has been the CEO/CIO of the firm since its inception with the goal of delivering value to his clients and his associates. 

Securities Offered through Triad Advisors, LLC. Member FINRA/SIPC
Advisory services offered through Jackson Wealth Management, LLC. 
Jackson Wealth Management, LLC is an affiliate of Jackson Retirement Planning, Inc.
Jackson Wealth Management, LLC is not affiliated with Triad Advisors, LLC.

755 Primera Boulevard, Suite 1001

Lake Mary, Florida 32746

Double Bottom Coming?

February 8, 2018

2/8/2018 9:05 AM

 

Dear Friends,

 

Let’s look at the daily chart of the S&P 500 index for the past 3 years. Observations:

  • We have seen 2 previous very fast moves down:

    • Green circle – in 2015, decline from top to bottom -12%

    • Orange circle – in 2016, decline from top to bottom -13%

    • In both cases the index (1) rapidly declined in a few days, (2) made a low, then V bottomed back up, (3) chopped around for about 1 month (4) went back down about 1 month later to re-test the initial low (5) in 2015 the index made a higher low, in 2016 it made a lower low (6) let’s call these patterns double bottoms (7) those double bottoms turned out to be good buying points. 

    • Buying when stochastics was oversold turned out to be a wise move in both 2015 and 2016.

  • Yellow circle - As of last night’s close, stochastics, a short-term indicator, has declined from the overbought condition, to oversold – good sign

  • Blue circle – the decline has been -8% to the initial low, if we follow the patterns from 2015/2016, we may see:

    • More choppy action for the next 20 trading days

    • An additional move down to retest the 2,648.94 closing low

      • We would hope that the retest, should it happen, will be successful and a move higher would occur, if 2015/2016 patterns repeat

 

We will continue to closely monitor the markets. 

 

If you have any concerns, please call us.

 

 

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