The S&P 500 bulls didn’t have much strength at all last week. The index slid down almost 4% by the close of Friday…3.94% to be exact. Obviously, the 50% retracement level did not hold. The good news for the bulls is that the S&P 500 is sitting on support and the short-term price action of Friday could be construed as positive.
The longer-term momentum of the S&P 500 is barely holding on to positive. It could close negative this month, but it is doubtful that it will with as much time as we have before the end of October. If the momentum turns negative, it will be a signal to pull the plug on the longer-term positions and preserve capital.
When it comes to the current positions, we got stopped out of US Aerospace and Defense and Transportation. The other US Sector positions were down for the week, but we did not stop out of them although they are relatively close to their respective stop prices. The Natural Gas position was down for the week and sitting right above our current stop price. The US Dollar position was up for the week and broke to relative new highs. It is certainly one of the best looking ones in the portfolio right now.
There were no new buy signals generated last week that are interesting enough to give a shot. We are watching closely as we are in the first leg down of a correction. If price can hold above current support, it is good for the bulls over the next week or two, but if we fall below current support the markets could at least another leg to the downside. We’ll be watching closely. Have a great week!
Adam Straseske, CMT