ITM OUT Signal.
Yes, it’s a death cross. All good things must come to an end – and that includes bull trades. We’ve got quite used to this one, having been in it for almost 17 months, but the last few weeks have been horrid, culminating in the 10/200 death cross, the ITM OUT signal.
Let’s check the charts to see what is happening.
SPY Chart
The 10/200 cross has just happened, although the whitespace between the SMAs is not very clear right now. However, if you look at the trajectory of the 10 SMA – to finish over the 200 SMA it would need to close at or over 610 – a 10% rise.
Possible? Yes, in the last 25 years it has happened twice before (Oct 13 2008 11.58%, Oct 28, 2008 10.79% during the GFC, and twice during the Covid turmoil it topped 9%.
Probable? Unlikely. The odds are definitely against it happening.
Which means that chances are that the death cross will be confirmed. Technically we should wait another day – and feel free to if you wish – but you may want to move today.
Looking at the chart we see that the next support level is another step down to 540, and after that to 520. I have put the volume on below the chart, as it is an indicator which can be useful in these circumstances.
Capitulation is the point where traders give up and sell their positions in a panic. It is characterized by high volume, and while the volume has been above average for the last weeks there is no sudden surge signaling that traders are panicking. Compare it with the surge in volume at the bottom of the dip in August 2024.
Decreasing volume in a downtrend can signal that it is running out of steam – it is called exhaustion. I can’t see any evidence of that either.
SPYG Chart
SPYG shows a confirmed death cross. There was a big spike in volume, but as it is traded much more thinly than SPY, I am reluctant to say that it is significant.
QQQ Chart
The death cross shows clearly on the QQQ chart also.
VIX Chart (Volatility)
The VIX chart shows a spike in volatility, but not yet as high as last August.
What next?
Does this mean that we are in a bear market?
No, absolutely not.
Does this mean that we start a bear trade?
No, absolutely not.
Just because a bull trade is ending does not mean that we ‘flip the switch’ and start doing bear trades. It is entirely possible that this will turn out to be a particularly nasty bear trap and we got caught in it. Some signs that it was just a bear trap:
- SPY closes above 610
- SPY starts to rise on significant volume.
- Breakout of key resistance level (say, 600)
Or the market could continue going down – in which case we stay on the sidelines, in cash and wait for the next signal. We can spend a fair bit of time out of the market – as anyone who has been trading ITM since 2022 would know. Graphically, for bull trades:
For bull and bear trades:
The Futures
The futures are up – but I have noticed that in the last few weeks they were frequently up pre market, sometimes by quite a lot, but it ended up being a down day, so I’m not putting too much reliance on them.
Soliloquy
It’s always sad when a bull run ends; but that’s life. The market does what the market does. If we are wrong to get out and it starts going up again then all good; as soon as we see our golden cross then we will be back in a bull trade. There’s no law against buying back in.
If we are right to get out then we are protected from further losses, and we can either wait until the market rises again, or until it is in a bear market, and we get a signal for a bear trade. We are now in correction territory but have to drop another 10% before we get to the bear threshold.
No trader can win all the time; the best we can do is make sure that our wins are greater than our losses.
Of course, we will all kick ourselves that we didn’t get out at the top of the market – but no-one knows when the top of the market is until afterwards.
Then it seems obvious. We can all be great traders in hindsight.
ITMeter
Next Blog
It seems a bit silly to do another blog this weekend as I will have nothing new to say, so the next blog will be on 24th March. Unless, of course, something happens that we need to do something then I will do a special post.
The week ahead
Fingers crossed – for what? I am not sure.
If it goes up I will get mail saying ‘why did you get us out?’ if it goes down it will be ‘why didn’t you get us out sooner?’
If I had a crystal ball I definitely would; but alas, I have to rely on statistics and observation just like everyone else.
Trade the tide, not the waves
Heather
41 Responses
Dear Heather,
Today Friday March 21, 2025 is Triple Witching Day which is quite scary like Halloween at the end of October. Thank you for following the rules and laws of the ITM Method and moving the positions into cash after the stock market shows signs of death cross (10ma below 200ma)
The triple witching days in 2025,
all Fridays, are:
March 21.
June 20.
September 19.
December 19.
Hi George – yes, I should have mentioned it last blog – but we are out of the market anyway.
I thought it ight drop – and it did on open – but then recovered.
Crazy days!!
h
Dear Heather,
Thank you for your reply. I appreciate it very much. April is usually one of the best three months for the stock market along with July and November (April, July, November). Hopefully the Golden Cross (10ma above 200ma) can occur during April. Anyways, the stock market does what the stock market wills. We only need to follow the rules and laws of the ITM (In The Money) and play the long game like American baseball which begins in March and lasts for several months until the end of October.
Sincerely,
George Henry
“You don’t know until you buy them”, as said by a Trader in the book Reminiscences of a Stock Operator. You also don’t know until you sell them. I am buying this morning because I am a Trader and am looking for a short term low. I do not recommend anyone else do this. I only Trade with some kind of Stop. I Trade much more than Heather. I try to hold on long or short for as long as I can. I make mistakes but I try to limit them. If you follow Heather and her System then use it and follow her. She has her way and if it suits you stick with it. I advocate that people find their own way to Trade but if you like Heather’s way and it suits you stick with it or anyone else’s system that suits you or your own that suits you. We all have something to contribute if you share. Heather shares!
Hey Tommy – I try to keep out of ITM Chat – as I don’t want people thinking I am overseeing it and judging them – but if you want to set up a thread for your way of trading so that people can follow it that would be absolute;y fine!
h
Thanks may do. I wish I had traded like you. You can teach an Old Dog new Tricks though as you have.
Heather – Thanks for all you do. This is actually an exciting time because taking profits is a key part of this strategy and one of the main reasons ITM blows the doors off of “buy and hold”. Sure, it may not even amount to a correction, but we’re managing risk here. No one can see the future. People can listen to whoever they want, I’m going to trust the math.
Hey Michael – Wise decision!
(I think, anyway!)
h
These days are part of investing.
I came across something that might interest you. https://youtu.be/DU8oaBxEAmA?si=CtYvOYkGEs_tTGpD
The idea is that 1% days, UP OR DOWN, are important negative indicators. They are statistically significant and when the frequency of 1% days increases you should expect declines.
Best to all.
Hi Heather,
Thanks for all your updates! I actually sold all my ITM options 2 days ago, but still holding onto the SPY/SPYG ETF positions (~40% of my portfolio). With the death cross occuring, do you hold or also sell the ETF positions to be 100% cash?
Ather
Hi Ather – personally, I have moved all my non-leveraged ETF positions to cash as well.
IN my book ‘Timing the Market’ I look at getting in and out of SPY shares using the 10/200 cross and found (from memory) that it increases your profits by 50% because you avoid the worst of the downturns – so that is what I would recommend.
Remember, there’s no law against buying back in!
h
Heather, thank you so much! Your help has been invaluable to me, and I deeply appreciate all that you do.
Alex
Hi Alexis – thank you so much for your kind words – I really appreciate them.
h
Dear Heather,
Thank you for all you do for us. I have definitely become a better trader reading your books and following your blog. I appreciate all the alerts and all the advice each week on the markets. You are one of the few experienced traders that we can follow and actually trust. I look forward each week to read your perspective and the markets! Many thanks!!
Thank you Charity – you have been following the blog for a few years now? I remember getting some nice comments from your before, and they are always appreciated.
Thank you!
h
thanks heather for created this strategy, something we can follow and easy to apply. it has been a journey through this 17 months bull run. we look forward to continue your strategy for many years to come. it taught us how to be patient and dedication in order to see great result.
Thank you Aaron – so kind, really appreciate it.
h
Have you done any backtesting to show results at various other dates? It would be interesting to see what the results would have been for the past 1, 3, 5, and 10 years. Does that make sense?
HI Jim, no I havent done that specifically, but here is a list of the ITM and market account values by year:
1994 $1,007 $978
1995 $746 $960
1996 $1,487 $1,290
1997 $2,058 $1,562
1998 $3,733 $2,141
1999 $4,612 $2,714
2000 $5,814 $3,262
2001 $5,650 $2,904
2002 $5,650 $2,648
2003 $5,307 $2,044
2004 $8,603 $2,570
2005 $8,394 $2,917
2006 $8,040 $3,005
2007 $10,401 $3,414
2008 $10,547 $3,663
2009 $10,547 $2,261
2010 $15,768 $2,922
2011 $18,444 $3,294
2012 $14,887 $3,450
2013 $18,889 $3,918
2014 $32,350 $4,967
2015 $38,283 $5,779
2016 $29,542 $5,614
2017 $37,530 $6,301
2018 $56,835 $7,767
2019 $54,599 $7,133
2020 $75,842 $9,383
2021 $83,368 $11,259
2022 $146,176 $14,289
2023 $95,883 $11,531
2024 $123,040 $14,637
2024 $181,362 $17,345
Sorry, can’t attach spreadsheet – but you should be able to copu and paste from that.
h
Dear Heather,
Thank you for posting this list of ITM annual return compared to the SP500 Index. It is very helpful.
Sincerely,
George Henry
You certainly deserve no hate mail. Your system is very simple and precise. No one should even need your alerts about the “death cross”. The fact that you give these alerts is just an indication of how much you care and how nice you really are. Thank you so much for your ongoing support. As for any “haters”, ………….well, I will just keep my mouth shut for a change.
Hi John – what a lovely email – thank you!
h
Heather
A rally today might be short covering before the weekend. Also avoiding a government shutdown due to Congress passing a budget. Hopefully…….
Larry
Hi Larry
yes, Friday was an upday – but on low volume so I don’t think we are seeing a reversal just yet.
But lets hope it is soon!
h
Dear Heather
As I have mentioned in the past I look so forward to your emails of calm and precision strategy with my morning coffee. Yes the market does what it does and we are all along for the ride. For some of us that got in late and are seeing a loss. this also is an opportunity to get in early on the next bull run. Now is a time to catch our breath and reset for the next run.
Hi Michael – so sorry you are one of the late arrivals!
I’ve been monitoring the futures – and they are all up.
Quelle dommage!!!
No – seriously – I am stilll planning on closing out all my positions tonight and moving to cash – I am telling myself that it means I am getting out at a better price.
Dammit – I wish I had a crystal ball that worked!
x
h
put another shrimp on the bar b watch the sunset tommorows another day
Hey Michael – we call them ‘prawns’ in Aus – and usually it is steak and ‘snags’ (snaggers = sausages) on the BBQ, but yes a sunset BBQ with a nice glass of bubbles sounds wonderful!
h
I think it’s important to report your profit while you were in the trade. I have appreciated your blog. Thanks!
Hey Jeanette – thank you!
h
Well said, I agree
Keep up the good work Heather
HI Michael – thank you for being so positive!
Yes, I’m all cashed up, over licking my wounds, now looking forward to the next trade!
h
Your advise has been always always wonderful. Thsnk you.
Thank you Ray – I am so wonderfully surprised at how lovely my readers are!
Was expecting the worst, lovely to be wrong in this case.
x
h
HI Jay – thank you, I really appreciate it!
h
Thank you for your hard work at keeping us updated weekly. Fingers crossed for a golden cross 🙂 Keep us updated please.
Thank you Ruben!
I just came back to the PC expecting some hate mail – so yours was a lovely one to open.
Thank you
x
h
Hi Ruben
thank you so much!
Re the golden cross, Friday was a good day but not, I think, a reversal. But we’ll see!
h
Dear Heather,
Thank you for your weekly blogs as always. Although you published your ITM books and blogs starting in the early 2020s, the In The Money strategies were back tested starting in 1993 until 2024 for more than 30 years already. For many of us who have joined recently, I can understand the trading losses. However please stay the course and stick with the rules of the ITM strategies. Once again, thank you for your hard works at keeping us updated weekly. Forever grateful.
Sincerely,
George Henry
Thyank you George – you were quick off the mark, I haven’t sent out the email yet!!
x
h
Dear Heather,
Thank you so much. I usually wake up quite early before Dawn in Los Angeles. By the way, Happy Pi Day (March 14 = 3.14).
Sincerely,
George Henry