The S&P 500 bulls had another win last week. The bears simply could not capitalize on the previous weeks weakness. Now, here we sit at the top end of resistance from late 2018. The S&P 500 clearly stalled again at the resistance area on Wednesday and Thursday, but on Friday the bulls made an attempt to break through and did so even though they could not do it with gusto.
The risk is relatively high for the bulls right now because the start of this leg up is a hefty distance to the downside and we are in the top third of the large trading range. This past week, the large cap stocks led the advance while small caps were up, they are structurally weaker right now. The S&P 500 is still considerably stronger than the MSCI All World (ex-USA) index. The international index is starting this week at a major area of resistance, so it will be interesting to see how the index behaves.
We ended up buying into intermediate corporate bonds because they broke to the upside and the risk reward ratios are favorable. The US Dollar was down for the week, but all other positions posted gains. We don’t have any plans to make any additional purchases this week and more than likely won’t get stopped out of anything as the stops are relatively far from where current prices stand. We’ll be watching closely as it will be an interesting week!
Adam Straseske, CMT