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Double Bottom Breakdown

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Today the major indexes sold off in unison, it could have been worse, this was only the S&P 500's 5th worst decline this year. Will the selling pressure continue? The system I previously mentioned, has generated 3 buy signals in the past 4 days, this is an unusual occurrence and normally only happens during bear market conditions. By my definition, we are not yet down-slide embedded, (meaning there's still room to the downside) and we aren't locked in.

From the August bottom to the most recent 52-week highs, both the S&P 500 and Transports are sitting just above a 50% retracement. This is the place I call our proverbial line in the sand and with the small caps already tagging a double bottom, this is a good place to rest.

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Looking at a 1-year chart of the S&P 500 verses the Wilshire 4500, we can see there is an unusual 6.71% performance gap (meaning the large caps are outperforming small caps by a wide margin). At some point in time I may transfer risk from the S-Fund to the C-Fund, that decision will be dependent on their performances during the next upwave.

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Best of trades...Jason

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SPY (C Fund) (delayed)

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DWCPF (S Fund) (delayed)

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EFA (I Fund) (delayed)

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BND (F Fund) (delayed)

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