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The S&P 500 was basically flat for the week. After it was all said and done, the S&P 500 finished up a small .02%. The bulls had a great opportunity to break to the upside past the resistance from March, but they could not. The good for the bulls is that the bears also tried to reverse the price action to the downside, and they could not. This type of price action is neutral.
The bulls still have control according the Bear ‘o’ Meter. This is essentially a tallied score of various trends, momentum, and economic indicators. These measurements change weekly and monthly, however there is more weight to the monthly indicators over the shorter-term weekly decision points. The shorter-term indicators simply give us a heads up that the longer-term ones could be in the midst of changing since the shorter-term measurements always turn prior to the longer-term. Right now, the shorter-term breakdown is more neutral than bullish which makes sense given the current trading range of many equities markets.
The swing indexes we like are the following: Extended Treasury / Australia / EAFE Value / Global Wind Energy / Healthcare Sector / Transportation
It was certainly a mix of performance this week. Healthcare was up nicely continuing the bullish action. Our Transportation buy trigger was issued and we initiated a position. Extended treasuries were up slightly for the week.
Since we added more risk to the portfolio through Transportation, we decided to take some risk off the table with Japan and keep the amount of overall risk similar. We are now almost 100% out of our international positions. They have simply not kept up with the US markets and we want to focus our efforts in the strongest markets.
There are a few buy signals coming into this week, but none that we’re excited about…mainly because they are buy signals with a larger bear trend and buying would go against our tenant of wanting to be in the strongest markets.
So overall, the bulls are still stronger than the bears even though last week was neutral. The bears could see last week’s price action as a sell signal, but it is a very weak one. The bulls have another good chance to break through resistance this week. If they cannot and price meanders in this range, it gives more credence to the bears.
The Education/Gratitude Book Club
The book for this month is “Habit Stacking: 127 Small Changes to Improve Your Health, Wealth, and Happiness (Most are Five Minutes or Less)” by S.J. Scott. I’m enjoying the book and doing my best to implement some of the suggestions. It kind of reminds me of something I heard Tony Robbins say which was something along the lines of “Most people overestimate what they can get done in a week and underestimate what they can get done in a life-time.” Have a great week!
Adam Straseske, CMT
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