When the calendar year ticked over into 2018, I warned my subscribers that we shouldn't expect another banner year like we had in 2017. I also mentioned that we should expect some volatility to return the market... little did I know that it would strike so quickly in the first few months of the year.
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But as the markets continue to gyrate, keep in mind the bigger picture. After rallying 7% to kick off the year, the market dipped all the way back into negative territory in March(posting a total loss of 3.2% for the year at that point), and has now swung back to a gain of about 3.5% year-to-date.
Right now, I think we're seeing the S&P 500 consolidate before it makes its next move. From a technical standpoint this is what we will be looking for over the coming weeks...
To the upside we want to see the S&P breach that 2,800-point barrier. If that happens, it's likely that the market will go on to reach new highs. If it fails to clear that resistance level, we could see a deeper correction, perhaps a drop down to around 2,585, where it would test its 200-day moving average.
For its part, my MP Score system is telling me that there's still momentum left in this market. In fact, it has consistently flagged new buys each week since I first alerted my subscribers to this chart back in March.
Those are promising signs, and they give us an idea of the sort of strength that we have in our current positions. Don't get me wrong, things can change, but as of right now the long-term trend line is still intact.
But it pays to have an entry and exit plan. For my subscribers and I, the MP Score system has the innate ability to get us into stocks when the trend is strong and building and out of equities when it begins to fade. We only need to look to the second half of 2015 and early 2016 as a recent example.
In August 2015, we witnessed a correction as the bottom fell out of the S&P 500. While the system can't forecast unexpected drops like this, it did move us out of stocks and into cash in the ensuing weeks. We booked some winners, and cut many losers short before they had the chance to ruin our portfolio.
I can't stress enough how important that is. As I've said time and time again, no system is perfect. And individual investors are often far worse. And usually it's not the lack of winning picks that does a system in -- or even an individual investor. It's the losers. Plain and simple. If you can limit the size of your losing positions, you're better off than 95% of investors out there.
Anyway, the market saw a short rally to end 2015, but 2016 started off in rough shape. But that was OK, since my system wasn't signaling many buys. So we stayed primarily on the sidelines waiting for the system to give us the all-clear signal, which it finally did in February...
In my February 26, 2016 issue, the MP Score system flagged seven new buys.
In short, it was telling us that it was time to get back into stocks, so we did and it paid off.
While we didn't time the exact top and the exact bottom perfectly, I'd say we did pretty well. Besides, no one system or person is going to be able to time it perfectly, and that's not the goal.
With the MP Score, it isn't our job to be the first ones to the party. Our thing is to show up fashionably late. I'd rather miss the first 10% to 15% of a major bull market if it means I'm making a much safer buy. Buying at or near the bottom makes for a great cocktail party story, but it's not how you want to try to grow your wealth over the years. It's simply too risky.
Like I mentioned, the MP Score system is still flagging new buys. That means you should still be able to make money in this market. But without a proven system at your disposal, it's like flying blind in this market. I wouldn't recommend it.
If you'd like to learn more about the MP Score, you can check out this report. It'll explain everything in detail, but it's really pretty simple -- we just sit back and buy and sell when the system says so. That's how we've made gains like 181% on Lannett (NYSE: LCI), 135% on Westmoreland Coal (Nasdaq: WLB), and 242% from Bitauto (NYSE: BITA). To learn more, simply follow this link.
This article originally appeared on StreetAuthority.com.