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The bulls continued the pressure on bears. They were able to raise the S&P 500 another 1.5% from the previous week. The bulls were barely able to break the larger trading range going back to March of 2018. If they can show some strength early in the week, we may see a short-squeeze catapulting the S&P 500 even higher.
The Bear ‘o’ Meter didn’t budge from last week. All in all, the S&P 500 looks bullish. You’ve got fundamental factors such as GAAP Earnings (Generally Accepted Accounting Principles) and Employment numbers that look good. Technically, you’ve got stocks still making new highs and some of the major asset classes following suit. Of course, all this can change in relatively short order, but right now it appears relatively healthy despite any negative news.
The swing indexes we like are the following: Extended Treasury / Australia / EAFE Value / Global Wind Energy / Healthcare Sector / Transportation / Natural Gas / US Aerospace and Defense
We added US Aerospace and Defense and added to the MSCI EAFE Value Index as both triggered their respective buy signals. We did not add to the Global Wind Energy position.
The indexes that have to do with the US markets look good. Even Treasuries have continued to hold support and traded up a little. The indexes that don’t look so hot…mostly international indexes. The week before last, it looked like they found some support buy showing some strength. This week, the follow through wasn’t the best as it could have been stronger. Doesn’t mean they can’t turn here, it is just generally more bullish if they have 3 or 4 strong bull bars off the bottom and we didn’t get our second last week.
Commodities weakened this past week. They were generally neutral to down depending upon the commodity index. They are still strong…especially relative to the international indexes, but they are not as strong as most of the US equities indexes.
We don’t have any buy triggers we are willing to commit to this week. The bulls have a great opportunity to squash the hopes of the bears with a continued break of the recent trading range. We will be watching closely to see if the bulls can continue their weekly advance or if the bears come in and start selling. If this does in fact trigger a ‘false breakout’ to the upside, we could see a rush of sellers. The S&P 500 is at a critical level and so it makes it for an interesting week!
The Education/Gratitude Book Club
This month’s book is “Do It Scared: Charge Forward With Confidence, Conquer Resistance, and Break Through Your Limitations,” by Scott Allan. An interesting part of the book is where he states the more fear you have about something, the more you need to do it. I suppose that works in the right context! We will be watching the markets closely and hope you have a great week!
Adam Straseske, CMT