The S&P 500 continues to lose momentum to the upside signaling we are close to a leg down. We have now seen three down weeks in the last two. The number of down weeks compared to up is one way to view the strength of the S&P 500. This past week generated a sell signal and now a trade below the 2800 level will cause the signal to trigger. The signal is the “set” in “ready, set, go.” The trigger is the “go.”
Longer-term monthly momentum is still positive but of course weakening with last week’s price action. The bears have until the end of this week to pull the S&P 500 down if they want a chance to get negative momentum on the longer-term momentum. International markets for the most part are still negative. US growth is still outpacing US value and US small caps are losing to US large caps.
The positions for last week were mostly up with the exception of the emerging market position. If the equity markets continue to falter, this one will surely follow suit. The US Dollar was slightly higher and the bond positions were up nicely for the week.
We don’t have anything to add this week as there are not any convincing buy signals going into the week. The risk is relatively high for the bulls since this last leg up is pretty darn lengthy. When the bottom of a bull leg is far away, the bulls take risk off the table by either adjusting their stops up or selling. Once the bulls and bears get in sync, meaning once the bulls start selling their long positions and the bears start shorting, we could see some larger downside moves. Don’t know if last week was the start of it, but if it is the case, one will surely be able to Monday Morning Quarterback it with all the clues that are relatively transparent. We’ll be watching closely Have a great week!
Adam Straseske, CMT