Where did the bulls go? They certainly did not continue their enthusiasm into this week’s trading. The S&P 500 finished the week down 1.03%. It turns out the gap from the previous week was at least exhaustive enough to give the bears room to pull the S&P 500 down to the second level of short-term support.
Yes, it was a bad week in the S&P 500 and frankly, most markets, but all is not quite lost. The 12-month momentum of the S&P 500 is still positive. The bad…well the bad is that the MSCI All-World (ex-USA) Index finished the week below the performance of short-term treasuries. This is a monthly reading, so we don’t have the final say just yet, but it is certainly bearish looking for the international markets on a whole. This is exactly why we have been focusing on the US markets for some time now.
When it comes to the portfolio, the last international position was stopped out. It was the final straw when it broke support and continued it’s downward trajectory. So, we took some risk off the table to preserve capital. The commodities and fixed-income positions were down for the week, but still within their prospective trading ranges.
The US equities positions were mostly down for the week, but we have a lot of wiggle room in there for movement. Until we either hit the stops or the 12-month momentum switches to negative, we will continue to focus our attention on the US equity markets for opportunities. This week, we don’t have any planned purchases as most everything is flashing sell signals or sell triggers on the weekly time-frame.
This week should be interesting as the S&P 500 is starting on support. We are looking to see if the S&P 500 can in fact hold and push to the upside, or if the bears can continue the pressure and pull the S&P 500 back into it’s prior trading range. If the S&P 500 does go back into the trading range, the longer it stays, the more bearish it looks longer-term. Have a great week!