The S&P 500 posted an incremental gain of .02% for the week. Until Thursday, the bulls looked like they had a great chance to show a strong buy signal, but they could not hold on. Markets typically go from directional…either up or down…to sideways. This past week was a great example of that unfolding. The markets moved down swiftly and last week there was a pause, or sideways move in the S&P 500.
The longer-term momentum of the S&P 500 is still positive even after the past few weeks of price action. In order for the momentum to switch negative on the longer-term basis, we would need to see about another 8% drop in price. An 8% drop in price would be a heavy warning according to momentum. Small caps are still underperforming large caps and value is underperforming relative to growth. Until we see a switch of momentum on the longer-term, we are still in a risk on stance for the longer-term even though things have softened over the past several weeks.
Most of the positions in the portfolio were flat for the week. The positions are still sitting on support or within their respective trading ranges. We did adjust some stops up given the weakness of the price action this week and the lack of any relatively strong bullish action. There are no strong buy signals so we don’t have any plans for new purchases. We will be watching closely and continue to look for opportunities. Have a great week!
Adam Straseske, CMT