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The bears took the bulls to task this past week. The S&P 500 didn’t fall much, 1.33% for the week to be exact, but it did fall beneath the last bull breakout. The good for the bulls is that they were able to at least stop the bears from closing the week on the lows. The bulls have their work cut out for them coming into this week as the S&P 500 continues to grind away in this large trading range that started in the beginning of 2018.
The Bear ‘o’ Meter didn’t move this past week. Even though the S&P 500 weakened once again this week, the monthly trend of the S&P 500 is still positive. Yes, the trend is still up, but the S&P 500 on a monthly time scale has established a sell signal. It is a weak sell signal…but a sell signal. The bulls broke to the upside and failed only finishing the month up .48% on the S&P 500.
With regards to the monthly momentum, the S&P 500 is still clearly outpacing the All World (ex-USA) Index and short-term treasuries. Until this relationship changes, we still want to focus on the US markets.
The swing indexes we like are the following: Extended Treasury / Australia / EAFE Value / Global Wind Energy / Healthcare Sector / Transportation / Natural Gas
It was a mixed week for the index swings. Basically, Treasuries held their ground with Australia while the remaining faltered. We did pick a new position with Natural Gas. The buy trigger was initiated and we took action.
Some of the positions are becoming close to our stop prices. If they do not turn to the upside soon, we will surely stop out in order to preserve capital. Many of the US Sectors are in a relatively large trading range. The longer they continue to meander at these levels, the more even the chances of a move down or a move up. Don’t know which way they will break, but they will break one way or the other in time.
A possible new position is Global Natural Resources. A buy signal was issued this week and so it is a possible trigger for this week. If the trigger hits, we will certainly act on it. The market’s momentum has slowed even though it remains positive. It is a market that demands respect. We are watching closely and not hesitating to act in either direction.
The Education/Gratitude Book Club
July is upon us and that brings up the next book! This month’s book is “Do It Scared: Charge Forward With Confidence, Conquer Resistance, and Break Through Your Limitations,” by Scott Allan. Happy 4th of July!
Adam Straseske, CMT
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