Written by: Angela Akers

As expected, Federal Reserve Chairman, Jerome Powell, and his mighty band of freedom fighters cut the key interest rate by 25 basis points Wednesday, that was the “good news.” However, the “bad news” was that the Fed signaled fewer cuts in 2025 than previously projected, dropping to two rate cuts from the four forecasted in September.  Investors dumped stocks in protest. While it was a hefty drop, as VectorVest subscribers, we shouldn’t have been “all in” the market anyway. If you’ve been with VectorVest for any amount of time, you probably know why, but I’ll take just a minute to explain anyway.

Our fastest, most aggressive Market Timing signal, the Primary Trend, has consistently been down since December 5th, when the Price of the VectorVest Composite (VVC) fell on a week-over-week basis. That same day, a Red light appeared in the Price column of the Color Guard. Following that, a lukewarm November Consumer Price Index was released Tuesday, December 10th, sinking stocks and confirming the downtrend. (Remember, a Confirmed Down call is signaled when the Price of the VVC has moved lower for two consecutive five-day trading periods and the BSR moves below 1.00). Therefore, since December 5th, the VectorVest Home Page, the Daily Color Guard Report and the end-of-week strategy section have been informing investors that it is not the time to buy stocks.

Yes, the market did try to bounce back a bit Friday, but one day does not make a trend and despite the rise, the Primary Trend has remained Dn. Nevertheless, is there any hope that Santa could deliver that short, but respectable rally in the last five trading days of the year and the first 2 of the New Year? While I can’t say whether that will happen or not, because VectorVest doesn’t predict the market, I can offer a little hope.

History has taught us that our key Market Timing Indicators, the BSR, MTI and RT, not only indicate the health and direction of an uptrend or downtrend, they also play an important role in indicating market turning points. When the BSR is at or below the level of 0.20, we know that the market is extremely oversold. When the MTI is at or below 0.60, we know that is another indication of an oversold market. Currently, the BSR is at a level of 0.29 and the MTI is at 0.68. Therefore, we’re not exactly there yet, but we’re getting close. This means that it is a good time to start preparing your shopping lists to go bottom fishing and bargain hunting once the market begins moving higher and an uptrend develops.

How will we know that the market is in an uptrend? Well, one of the first things that will clue you in to a trend change, even before the Primary Trend turns Up, lies in the RT of the Price of the VVC. Often, the RT begins to trend higher while the Price of the VVC is still trending lower, signaling that the downward momentum is dissipating. Additionally, you’ll want to keep your eye on the Top Five One-Day Derby Winners. When they begin to consistently show Bullish searches, it signals that buyers are coming back into the market.

However, as always, before you buy any stocks, consult the Color Guard and wait for market follow-through. Until then, keep your powder dry and Watch For The Turning Points.

PS. When the time is right to buy stocks, you’ll want to be ready so you cannot miss this week’s “Special Presentation” where Mr. Steve Chappell will help you “Prepare to Go Bottom-Fishing.”

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