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The S&P 500 finished the week up .31%. It was basically a neutral week. Neither the bulls or the bears could break out of the range created the week before. The S&P 500 continues to trade in a series of trading ranges. The longer the trading range persists, the more evenly distributed the probability of a break to either side. Right now, the bulls still have the slight advantage on a weekly scale as the prior trend was to the upside.
Bear ‘o’ Meter
All of the data points we look at to get the bear ‘o’ meter didn’t budge. So the reading stays the same. This means we are still in a risk on stance with regards to the longer-term. US markets are outperforming most International markets. Much of this isn’t so much due to rising US markets, but declining International markets as US markets remain relatively flat. We are focused on small caps and US growth for the time being.
The swing indexes we like are the following: United Kingdom / Japan / Oil / Extended Treasury / Australia / Brazil / EAFE Value / Global Natural Resources / Global Wind Energy
International markets didn’t fare so well this past week. Most were down for the week by the time the closing bell rang on Friday. We sold Oil and Global Natural Resources. Global Natural Resources looks to be forming a double top and Oil failed at the top of a larger channel. By doing this, we took some risk off of the table.
We are still looking to add healthcare as it didn’t quite trigger last week. So, if we can get positive action this week, we will certainly add it to the mix. Small cap stocks are pretty darn close to highs so we are watching closely to see if they can pull the remaining US markets up or if the inverse will happen.
US bonds turned up this past week, but we still don’t feel too comfortable with the action. If we can get to the top of the range before hitting our stop, we will surely look at exiting our extended treasury position.
The Education/Gratitude Book Club
The book for this month is “Misbehaving: The Making of Behavioral Economics” by Richard H. Thaler. Just got the book in and haven’t even cracked the cover…I’m going to do my best to get this one done before June, but it may go into next month. It’s a short trading week…and I hope you had a heartfelt Memorial Day.
Adam Straseske, CMT