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Yes, the S&P 500 finished the week up 1.99%, but that what not enough to close above the current three week trading range. Goodness gracious, each time lately when the bulls are sitting on the cusp of making some headway, the bears come in and take the wind out of the sale of the bulls. We are about 15 days into a sideways trading range in which we are at the top. The bulls have yet another opportunity to squeeze the S&P 500 to the upside, but they’ll want to do it quick in order to strike fear into the bears that are shorting in the 2675 level.
Bull / Bear Market
We are still well within the restraints of a bull market. The S&P 500 and MSCI All World (ex-USA) indices are both ahead of treasuries. Between the two indexes, they are just about neck and neck, but the S&P 500 is winning the battle right now. What this means is that on the longer-term basis, we are not in bear market territory and that we are still in a ‘risk on’ stance on the longer-term.
The swing indexes we like are the following: United Kingdom / Japan / Oil / Extended Treasury / Australia / Brazil / International Government Inflation-Protection Bonds / EAFE Value / Global Natural Resources
Most of the indices were positive this week with an exception of a few. We did not adjust any stops up, but we are close to adjusting up in the Oil holding. We will move the stop up if we get a push higher again this week confirming last week’s breakout to new highs.
If there is an index I’m disappointed in, it’s Brazil. It looked so promising at the beginning, but has just become weaker and weaker. It was down 2.53% for the week and is once again testing support. The good is that it is still in the bull channel and we are arguably on the third push down which could be a wedge bottom. We’ll continue to monitor and adjust if need be.
If you were reading the Index Swing Positions and had them committed to memory, you recognized a new index…Global Natural Resources. We added it last week because it broke out of the current trading range and given the state of the other commodity indices it made sense. We have a stop and second purchase range all picked out and so now we will continue to monitor and adjust accordingly.
Housing Starts numbers are scheduled for release Tuesday morning which could be a market moving event. We don’t have any possible buy triggers that we are excited about this week. The main thing is to keep a close eye on treasuries to see if the continue to hold on support and our Oil position to see if we can adjust the stop up.
The bulls are starting the week at resistance in which they failed at on Friday. Monday is a new day and they are so close so it will be interesting to see if they can muster up enough energy to break the S&P 500 out of the current 3 week trading range. If they cannot, it will give credence to a downside break.
The Education/Gratitude Book Club
This month’s book is “The War of Art: Break Through the Blocks and Win Your Inner Creative Battles” by Steven Pressfield. The book is great. If you haven’t read it, read it, if you have read it, well, read it again. Have a great week.
Adam Straseske, CMT