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Written by the iInvest® Team

Massive Institutional Smart Money Program Buying followed by Uncharted Waters!

There were a huge number of Institutional “smart money” buy programs Friday 12/7/2018. In fact, Rennie Yang from Market Tells, who is one of the best Quantitative Analysts we have seen over the years, points out we picked up a total of 92 that day, one of the highest readings ever recorded.  These buy programs occurred in the 2630-2650 levels on the S&P 500, which would normally signal strong support going forward and/or signal a significant market bottom is near.  In fact, Institutional Program buying has been happening all year throughout 2018, defending various levels between 2600 and 2700 on the S&P 500.However, the stock market does not agree and has rapidly moved down through these levels.

In summary, we are in somewhat uncharted waters as the equities markets have turned solidly negative despite the Institutions defending certain levels on the S&P 500 throughout 2018.  Normally, when the big institutional “smart money” steps in heavily it pays to take notice.  Nevertheless, this time the market does not agree, at least in the short-term.

See below a 5-year chart of the S&P 500 showing major buy programs buy Institutions (blue arrows).  You can see the sudden drop below these areas the last week.

Major Institutional Buy Programs 5-Year Chart

NYSE entering a strong support zone

The NYSE was the first major index to show us the overall weakness in the U.S. equities markets, having already dropped to a key support zone dating back to 2015-2016 weakness.  At that time, the NYSE was forming a bullish inverse head and shoulders pattern, and a bullish cup and handle price pattern which eventually broke to the upside on big volume in 2016 during the presidential election.

In the days ahead, we will be watching this support zone for any signs of a reversal.

Gold Update

Several clients have asked us about Gold the last few weeks, so we thought we would give our analysis here.  In this chart, we are looking at GLD, a Gold tracking ETF.  Gold has been in a secular bear market since 2012.  Over the last few years, it appears to be forming a rounding bottom with a possible bullish Cup and Handle reversal formation within a complex bullish Inverse Head and Shoulders pattern, where volume seems to be confirming this.  In the weeks and months ahead, what to look for is a break above the neckline on larger relative volume, then a possible retest of the neckline as support on diminishing volume, giving a 2nd buying opportunity.  This could take weeks/months to play out.

TacticalSHIFT® Update

Thus far, the iInvest®  TacticalSHIFT® database has not issued a SHIFT down in 2018 despite the recent volatility, but iInvest® will let clients know if a SHIFT takes place in the days/weeks ahead as we see how the market unfolds.

There have been many warning signs of a potential shift coming, as seen in yellow below, but has not triggered yet.


Stay tuned…

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