Let’s Preserve Capital as the UK Market falls

Preserve Capital

VectorVest UK Market Timing Graph - Sep 2021
Click or tap image to enlarge

The chart above shows the VectorVest Composite of the UK market (VVCUK) since the Covid collapse in February 2020. The VVCUK is an equally weighed index of all the shares that VectorVest follow on the LSE and AIM which is approximately 2200 shares. It is the broadest measure of the London markets that I am aware of.

The red and green triangles on the chart show the longest measure of the trend on the VectorVest system. These are known as Confirmed Calls. At the present the red Confirmed Call is Down. Its not a time to be buying shares. Below is the advice from the home page of VectorVest which clearly instructs to stand aside.

The Color Guard is neutral
Click or tap image to isolate.

The last two Confirmed Down signals lasted only a few trading days but the selloff after the Confirmed Down signal of Feb 2020 produced a large loss for many who ignored the signal. At this Confirmed Down signal we don’t know for sure whether its another February 2020 or akin to the last two signals that came to nothing. Neither does anyone else. There are certainly enough headwinds around in the world’s economies.

So, what to do?

  1. Don’t buy any more stocks until VectorVest says its safe once more to buy stocks. The advice will be clear and unambiguous.
  2. Watch the stops on the shares you are holding and exit the share if it closes below the VectorVest calculated stop.
  3. Consider raising cash in those holdings that have underperformed in the last upswing. This will be ammunition for a new series of purchases when the tide turns. The Market Timing Gauge will tell us exactly when to act.

Let’s preserve capital at all costs and hang on to those impressive post Covid gains that most of us have captured.

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2 thoughts on “Let’s Preserve Capital as the UK Market falls

  1. The McClellan Oscillator (MO) is a market breadth indicator that is based on the smoothed difference between the number of advancing and declining issues. It generally reflects money coming into the market when positive and it portrays money leaving the market when negative. The current status of the MO is in the negative for all US and UK markets confirming Vector Vest view of a confirmed call to the downside so October should be an interesting month!

  2. Hi Andrew,
    That’s interesting; I’ve never heard of MO and it’s not part of VectorVest, so may I ask where did you found it and on which chart/platform you use it?
    I’m sure we’d all be grateful. Best wishes,
    Nigel

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