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It’s like the bears are in hibernation. The S&P 500 finished up .86% for the week. There was some slight profit taking during the week, but as prices modestly declined in the S&P 500, the bulls once again showed their power and pushed the index to record highs. I don’t know how much longer this can go on, but the bulls certainly have control of price action at this moment.
Bull / Bear Market
Of course, the S&P 500 and All World (ex-USA) indexes are both in strong bull markets. Both of the indices are greatly outpacing treasuries on a 12-month rolling basis. The discrepancy between short-term treasuries and the indices is about 25.5% on a 12-month rolling return. The two equity indexes are just about neck and neck in their performance against each other. If you look at the instruments that are actually tradeable, the MSCI All World (ex-USA) vehicle is than the S&P 500 vehicle.
The list of indices for swing plays are as follows: Canada / United Kingdom / Japan / Oil / Extended Treasury / Australia / Brazil / International Government Inflation-Protection Bonds
Most of the indexes above were relatively flat for the week. The best performer by far was the Brazilian index which finished up 2.83% after trading closed. It is on the verge of breaking to new relative highs which is bullish. The worst performing index was the oil index as it finished down 1.54% for the week. However, it is not the index that looks technically ‘bad.’
The index that doesn’t look too hot is the treasury index. It’s getting into the second buy zone, but we are going to need a strong buy signal and trigger in order to take action. As you can imagine, most bond indices are not doing too hot right now. Some are closer to support than others, but this is definitely an asset class you want to pay close attention to and make plans BEFORE the price action happens.
Yes, it is true that the bears are asleep on Wall Street right now, but they can crawl out of their cave at any moment. And that is probably how we will see price action play out. It is quite possible that the bears will slowly come back into the market before there is much relatively sharp selling. We will be watching the swings closely, but more than likely no new action will be taken this week as we are relatively far from 2nd purchase ranges and stops.
The Education/Gratitude Book Club
Since we finished Viktor Frankl’s “Man’s Search for Meaning” early, we have time to squeeze one more title in there before February’s book. This one is a little older book, but it is a short, sweet, and easy read. The book is called “The Slight Edge,” by Jeff Olson. If you want a complimentary copy…be one of the first three and I’ll get it out to you as quickly as possible so we can finish it and start with the February title!
Have a great week!
Adam Straseske, CMT
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