The S&P 500 FINALLY broke out of the trading range which started back in January. It’s taken the bulls almost 9 months to do it…but they got it done. The bulls pressure was so strong in the beginning of the week that they opened the S&P 500 higher on Monday than the high of the previous week forming what’s called a gap. Gaps can be reversal or continuation signals. It is too early to tell with this one.
The end of the month momentum is still bullish for the US markets. US small caps remain stronger than US large caps and US growth remains stronger than US value according to 12-month momentum. When we add all the indicators up and get the bear ‘o’ meter reading, it still suggests a risk on stance.
Last week, we added a little risk to the portfolio with Technology. It is one of the strongest sectors in the US. It is also on new highs this past week. Our international and treasury positions are the weakest by far. Both are relatively close to being stopped out. Commodities are still basically flat. The best performers are all related the US equities markets.
This week we will not be looking to add anything. We will watch closely and quite possibly adjust some stops up to tighten the risk. Hope you had a great Labor Day! Gonna be an exciting week in the markets!
Adam Straseske, CMT