The S&P 500 bears came out of the woodwork last week. We got a sell signal three weeks ago along with the sell trigger a couple of weeks ago. The bears certainly fulfilled the validity of the sell trigger this week pulling the S&P 500 down over 4% for the week. The good news for the bulls is that they were able to close the S&P 500 off of the lows for the week showing at least some hope for price action to the upside this week.
The US equities market has certainly softened over the past few weeks. However, when we look at the longer-term monthly picture, this is pull-back in an up trending market. The US equities are still outpacing short-term treasuries on a 12-month rolling basis and far above the All World (ex-USA) index. With that, we are still in a risk on stance on the longer-term positions.
The US equities positions in the portfolio were down for the week. The good is that they are, for the most part, on some area of support whether it be a channel line, a previous low, or a moving average. All of those can be areas in which the bulls feel confident in buying. We have one commodities position left and the dollar position remains as well.
There were no buy signals with much interest after this week’s price action so we are not looking to add anything to the portfolio this week. We are looking for a bounce in the equities markets. If we get that bounce, we will be watching the strength of the bounce. If there is immediate price action to the upside, we will look at adjusting stops slightly higher. If there is a slow, meandering bounce to the upside, we will look at adjust stops tighter. Either way, it should be an interesting week in the markets! Have a great week!
Adam Straseske, CMT