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It was another week of swinging back and forth in the S&P 500. The week started with the bears in control. They tried to get the S&P 500 past support, but they could not so by the end of Thursday, the bulls capitalized and pulled the S&P 500 higher. The S&P 500 ended the week down .24%.
Bull / Bear Market
The month of April finished with both the S&P 500 and MSCI All World (ex-USA) indices greatly outpacing short-term treasuries. The S&P 500 lost a little ground to the All World Index, but it is still in the lead when it comes to the 12-month momentum. We still have a bias towards the US indices for that reason. So, could we see a bear market relatively soon? Sure, but right now, we remain in a risk on stance on the longer-term.
The swing indexes we like are the following: United Kingdom / Japan / Oil / Extended Treasury / Australia / Brazil / EAFE Value / Global Natural Resources / Global Wind Energy
The indexes were fairly mixed this week. The winners for the week were Australia and Oil. Most of the international indices look similar in nature to the S&P 500. Of course, there are some exceptions, but for the most part, they are stuck in a trading range akin to the S&P 500. With regards to Oil, we are very close to a price target…About 40 cents off. If it starts to stall, we will look at reducing risk.
We ended up getting a position in Global Wind Energy. It started Monday strong and faltered for the week until Friday. We started our position late on Friday. We’ve got a second purchase range baked into the formula along with a stop below current prices.
The S&P 500 tested the lower end of the current trading range this past week. The good for the bulls is that it did not break…the bad for them is that they can’t seem to break to the upside just as the bears can’t break to the downside! On the longer-term basis, the bulls still have the advantage for the break to the upside. However, the longer the S&P 500 treads water, the more evenly the advantage is split. The bulls have a great opportunity to push the S&P 500 out of the trading range this week…they are so close! We’ll see if they can get off their hands and get the S&P 500 out of this narrow trading range!
The Education/Gratitude Book Club
And another month has passed so it is time for another book. The book for this month is “Misbehaving: The Making of Behavioral Economics” by Richard H. Thaler. I’m looking forward to reading it as some of the reasons for trends in the stock market are attributed to psychological factors such as herding. Have a great week!
Adam Straseske, CMT