The S&P 500 stalled last week and fell .54% after the dust settled Friday afternoon. The weekly price action is still bullish for the S&P 500. As we’ve commented on in the videos, the S&P 500 will be bullish until there is either a significant move to the upside at an angle higher than it’s current projection, or if there is a break of support. Either one of those would cause concern for the bulls.
It was a big week simply because the monthly readings came in…and we had some changes in the readings from last month. One thing that did not change is that we want to focus on the US equities markets over the broad international markets as the S&P 500 continues to greatly outpace the MSCI All World (ex-USA) Index. Another thing that did not change is the relationship between the styles of growth and income. Growth continues to leave value behind according to momentum. The thing that did change is the dynamic between small caps and large caps. Large caps have started to outpace small caps and so we want to rotate into large caps for that part of the portfolio. Finally, the bear ‘o’ meter is still positive which tells us we want to remain in a risk on stance on the longer-term.
It was a mixed bag for our US equity sector positions. They were either up or down a little. So, there were no changes. The commodities positions were down a little but still remain well within their respective trading ranges. The one position I thought for sure we were going to see negative price action, the US treasury position, did not give way to the bears and bounced on support. Our stop was not hit and we remain in the position.
This week could be a busy week. There are really two main things. We are looking at possibly adding a US Dollar position. The US dollar has definitely strengthened and if we get a buy trigger, we will surely take action and add it to the portfolio. The second is that we will rotate styles from small cap to large cap due to the change in their relationship of 12-month momentum. Of course, we are going to keep a close eye on our current positions. So, look…have a great week!
Adam Straseske, CMT